Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

TRENT RIVER AUTHORITY BILL (By Order)

GREATER LONDON COUNCIL (GENERAL POWERS) BILL (By Order)

Order for Second Reading read.

To be read a Second time on Tuesday next.

Oral Answers to Questions — EDUCATION AND SCIENCE

School Building Finance

Mr. David James: asked the Secretary of State for Education and Science, in view of the growth in population in the south-eastern corner of the county, whether she will increase the allocation of funds to the county of Dorset for school building purposes.

The Under-Secretary of State for Education and Science (Mr. Norman St, John-Stevas): No, Sir. Major building programmes in the period 1972 to 1975 will provide 4,790 new primary and secondary school places in South-East Dorset, 85 per cent. of the 5,600 new places to be started in the county as a whole.

Mr. James: I am grateful for that reply. Will my hon. Friend recognise, however, that between 1966 and 1970 the number of electors in my constituency rose by 10,808? This inevitably has meant that there are a great many more children, and in the area from Verwood, Ferndown, West Parley, West Moors, Corfe Mullen down to Poole there is still a grave shortage of school places.

Mr. St. John-Stevas: We appreciate that there has been a local population explosion in South-East Dorset, and the major programmes which we have provided for new school places exceed £1 million in value in each of the three years 1972–73, 1973–74 and 1974–75. In addition to the major programme, my right hon. Friend has recently increased the authority's minor works programme for 1973–74 by £50,000 to meet local shortages of primary school places.

Mr. Dormand: asked the Secretary of State for Education and Science what proposals she has to increase the money available for new school building.

The Secretary of State for Education and Science (Mrs. Margaret Thatcher): Since June 1970 the existing primary and secondary school building programmes up to 1974–75 in England and Wales which has been planned by the last Government have been increased by about £160 million. I have also announced new programmes of £30 million for nursery education in 1974–76 and £20 million for secondary improvements in 1975–77.

Mr. Dormand: In spite of what the right hon. Lady has said, may I ask whether she is aware that there is an immediate need for additional moneys by some local education authorities, including my own, Durham County Council, because of their inability to meet the cost limits set by the Department? It is no exaggeration to say that in some parts of the North East the position is becoming critical. Will the right hon. Lady be a bit more generous in her special allocation, which I know she makes from time to time, and look at the matter as one of urgency?

Mrs. Thatcher: With respect, there is a specific Question about cost limits later on the Order Paper. It would perhaps be best and most courteous if I left the reply until then.

Mr. Hattersley: Despite the answer which my hon. Friend received to his Question, will the Secretary of State confirm that the public expenditure White Paper, unlike the White Paper "Education: A Framework for Expansion", makes it very clear that over the next four years the capital available for school building will be reduced by 22 per cent?

Mrs. Thatcher: The public expenditure White Paper was drafted in conjunction with the "framework" White Paper. There is a reduction in the amount of money allocated to the basic needs programme. This occurs because the number of children coming into the education ambit is reduced.

University Places

Mr. William Hamilton: asked the Secretary of State for Education and Science if she will initiate an inquiry into the fall in the demand for university places.

Mrs. Thatcher: The number of home candidates who applied for admission to university through the Universities Central Council on Admissions fell by less than 1 per cent., from about 115,000 in 1971 to about 114,000, in 1972. I see no need for an inquiry.

Mr. Hamilton: That is a fairly complacent reply. Can the right hon. Lady say whether there has been a downward trend in any other year within the last 10 years or so, and how does this compare with the projections made by the Robbins Committee a few years ago? Does not the right hon. Lady agree that the situation is very disturbing?

Mrs. Thatcher: We are discussing the number of candidates who apply for admission to universities. We do not keep extensive statistics on those candidates, but we keep statistics of the number of entrants and this information will be determined later in the year.

Mr. Marten: In view of all the public money spent on this subject, does not my right hon. Friend think that the work of universities should now perhaps be a little more geared to the needs of the nation?

Mrs. Thatcher: I think that the work of the universities is geared to the needs of the nation, but I am not certain that the nation has always taken up and made the best use of some of the research work carried out in the universities. There is no denying that some of the best research work the world over is done in our universities.

Mr. Moyle: Does the Secretary of State agree that one factor that discourages

people from applying for entry to universities is that there is a rising parental contribution which is not always met, and that the system favours the students from well-off families at the expense of those from less-well-off families?

Mrs. Thatcher: Not necessarily. I think the greatest objections tend to come from, if I may use the phrase, middle-class homes where the parents feel that they cannot meet the contribution and the students perhaps feel that they should. That perhaps is where the greatest hardship occurs.

Teachers' Housing (Bedfordshire)

Mr. Madel: asked the Secretary of State for Education and Science whether, in view of the rising school population of Bedfordshire, due to the Government's policy on London overspill, she will make additional grants to the county council to assist with the housing of teachers.

Mr. St. John-Stevas: Local housing authorities are free to build houses to meet the needs of their area. The arrangements for grant are made by the Housing Finance Act 1972. This does not provide for specific grants for housing of teachers.

Mr. Madel: In view of that reply, may I draw my hon. Friend's attention to the fact that a rise in population such as we have seen in Bedfordshire means that there is an increase in education problems? May I have his assurance that he will keep in very close touch with the Bedfordshire Education Authority to make sure that these education problems are overcome?

Mr. St. John-Stevas: Yes, my hon. Friend may have that assurance. I am concerned about this problem, as my hon. Friend knows by the correspondence which we have been having. Apart from the ability of local authorities to provide council houses for accommodation for teachers, local education authorities have adequate powers to build or buy houses to mortgage or to lease to teachers. This is entirely a matter for the local authorities. The Bedfordshire Education Authority has a very good record in this respect. I understand that it will extend its efforts to provide accommodation for married and single teachers. I hope that


other authorities will follow this excellent example.

Mr. Freeson: In view of that reply, will the hon. Gentleman indicate to the House the amount of loan sanction that the Department has given to local education authorities in the past 12 months to provide housing along the lines he has suggested?

Mr. St. John-Steyas: I should be glad to provide the hon. Gentleman with the information he has requested.

Secondary Education (Capital Expenditure)

Mrs. Renée Short: asked the Secretary of State for Education and Science how much capital expenditure on secondary education is provided for in her White Paper; and what proportion of this will be spent in the West Midlands.

Mrs. Thatcher: The school building programmes for 1975–76 and 1976–77 will each be increased by £10 million for secondary school improvements in England and Wales. The allocation of these extra resources is under consideration.

Mrs. Short: Is the right hon. Lady aware that her hon. Friend the Under-Secretary, when he was in the Midlands before Christmas, said that the West Midlands would get the lion's share of that allocation of money? He obviously was talking off the top of his head again.
May I draw the right hon. Lady's attention to the fact that the West Midlands, and Wolverhampton in particular, is an educational priority area which has been denied any secondary school building capital investment since the right hon. Lady's Government took office? Therefore, there is a great deal of leeway to make up in replacing old secondary school buildings, Will the right hon. Lady see that her colleague's promise is carried out? We would be very grateful.

Mrs. Thatcher: Perhaps I might give an assurance that the West Midlands will gets its due and fair share of the moneys available.

Mr. Montgomery: May I add my plea to my right hon. Friend that the West Midlands should get its fair share for secondary school rebuilding? Will she underline to the hon. Member for Wolverhampton, North-West (Mrs. Renée

Short) that this is in addition to the biggest primary school replacement programme of all time?

Mrs. Thatcher: I am grateful to my hon. Friend. It does, of course, come on top on an allocation of £50 million each year for the replacement of primary schools.

Mr. Hattersley: How many secondary schools does the right hon. Lady think £10 million will buy, and how many secondary schools need to be replaced? How does she relate those two figures with her announcement just now about a cut in the primary programme?

Mrs. Thatcher: We know of about 300 secondary schools that date from the last century. There are more if one takes into account the numbers that have quite an amount of temporary accommodation. I point out to the hon. Gentleman that the programme of £10 million compares very well with the last two secondary school improvement programmes which were left to me, one of which, upgraded to current values, would be £2·9 million a year and the other £2·3 million.

Mr. Spearing: Is the right hon. Lady aware that just before Christmas her hon. Friend the Under-Secretary said that London would get one rebuilding project in two years costing less than £1 million if it was lucky? Does she think that that allocation is very small relative to the need for the rebuilding of nineteenth century schools to which she has referred and other Government expenditure of a very high order not very far from where we are sitting?

Mrs. Thatcher: It is smaller than I would wish. It is the start of a rising programme. It is very much better than the last two programmes of the last Labour Government. It is up by almost four or five times.

Offshore Engineering

Mr. Douglas: asked the Secretary of State for Education and Science what is her policy with regard to the proposals of the International Management and Engineering Group relating to higher education.

Mrs. Thatcher: The proposals are being examined by my Department in consultation with the Department of Trade


and Industry to determine what contribution education should make to meeting the requirements of the industries concerned.

Mr. Douglas: I thank the right hon. Lady for that reply. Is she aware of the imperative need, as expressed by the IMEG Report, to facilitate the expansion of offshore engineering education in our universities? Will she pay particular attention to establishing such institutions or supporting such institutions as the Heriot-Watt University where we already have an institution of offshore engineering which, in my view, is inadequately financed?

Mrs. Thatcher: The hon. Gentleman has previously made that point about the Heriot-Watt in other ways. I think that we need first to determine whether there is an extra need for specialist courses over and above those needs which are already being met. Once we have done that we will certainly do our best to help.

Mr. Laurance Reed: Will my right hon. Friend bear in mind in these deliberations that in America the Federal Government now spends up to 6 million dollars a year in this direction and that many of us feel that our Government will have to make a comparable effort if the nation is to reap the full rewards from this exciting development?

Mrs. Thatcher: I am grateful to my hon. Friend. We have one specialist course in this sphere. We are looking to see whether there is a demand for more. I assure my hon. Friend that I am most anxious that the university system should respond to the needs of industry and commerce and be seen to be meeting those needs.

Lanchester Polytechnic, Rugby

Mr. William Price: asked the Secretary of State for Education and Science whether she has received any recent communication from Coventry City Council about the future of the Rugby site of Lanchester Polytechnic.

Mr. St. John-Stevas: No, Sir.

Mr. Price: Is the hon. Gentleman aware that, despite the promises given by previous Ministers, Coventry City Council is determined to do away with the Rugby site of the polytechnic? Is he

prepared to stand by and authorise the sort of bare-faced robbery that would have brought a blush to the cheeks of Lady Godiva, or will he order a full inquiry into this sordid and miserable affair?

Mr. St. John-Stevas: I must leave Lady Godiva to look after herself. I am aware that the proposals for the development of the polytechnic on the Coventry site and the future of the disposition of the Rugby premises have been agreed by the governors, by the joint education committee, by the Coventry City Council and by the Warwickshire County Council. Whatever the merits of these proposals, they do not require the formal approval of the Secretary of State.

New Schools (Cost Limits)

Mr Duffy: asked the Secretary of State for Education and Science if she will now raise the cost limits imposed on local authorities in order that they can maintain standards in planning for new schools.

Mrs. Thatcher: I am aware that a number of authorities are facing cost difficulties and that the recent wage award in the building industry will influence school building costs. I am keeping cost limits under review.

Mr. Duffy: Is the right hon. Lady aware that in the West Riding of Yorkshire some 48 schools due to be built in the coming year will be hit by inflation with the result that some may not even get off the ground? Is she aware, further, that tenders for school projects already are running £30,000 above her Department's cost limits and that unless she raises them soon local authorities will have to choose between building substandard schools or none at all?

Mrs. Thatcher: We are familiar with this kind of problem which happens when cost limits appear not to be wholly adequate and are not raised as often as hon. Members would wish. We are following the same procedure as is customary—that is, being specially understanding about any abnormal costs which have to be met.

Mr. Armstrong: Is the right hon. Lady aware that it is not an abnormal situation any longer and that it is now normal


throughout the country? Is she aware further, that a number of builders put in tenders knowing that they do not want the jobs in question? The difference between the tender price and the cost limits is such that school building is being held up. This is very urgent. Will the right hon. Lady please do something about it?

Mrs. Thatcher: Despite the hon. Gentleman's fears, I believe that we shall achieve our school building starts programme this year.

Mr. Raphael Tuck:: What is the use of having rigid cost limits when the cost of living is rising and rising? Why not gear the cost limits to the cost of living so that they can rise pari passu?

Mrs. Thatcher: Because the cost of living index is not the best one in this case. The cost limits went up by 15 per cent. in April of last year, by 13 per cent. in April of the previous year and by 10 per cent. the April before that. On the whole the Department has not been slow to respond to the rising costs of building.

Medical Students

Dr. Stuttaford: asked the Secretary of State for Education and Science how many medical students attended universities in 1972; and how this compares with the number in 1967.

Mr. St. John-Stevas: In the academic year 1967–68 there were 12,600 undergraduate medical students in Great Britain. The exact number in 1972–73 is not yet known but is estimated to be 15,100.

Dr. Stuttaford: Does my hon. Friend agree that as well as maintaining numbers it is also important to maintain quality and that when assessing quality it is just as important to have a personality assessment as it is to have an academic assessment, because the general practitioner service depends more upon dedicated service than upon high academic standards?

Mr. St. John-Stevas: I agree that personality qualifications are equally as important as academic qualifications. We hope to have both in the new schools being developed at Southampton and Leicester. We hope that high standards in both spheres will be maintained.

Mr. Edwin Wainwright: Can the hon. Gentleman say how many women medical students attended universities in the two years in question? Can the hon. Gentleman also state why we seem to be so much against women becoming doctors in this country?

Mr. St. John-Stevas: I should be glad to provide the figures for the hon. Gentleman. Perhaps it would be safer to do so after tomorrow.

Mr. Selwyn Gummer: Will my hon. Friend not only provide the figures but look into the fact that medical training is very much less available to women than to men and that that has been the case for years? Would it not be a good step for the present Government to see that that is no longer true and that women have the same chance as men?

Mr. St. John-Stevas: If it were a fact, I should be prepared to look into it.

Mr. James Johnson: The hon. Gentleman referred just now to the new schools at Southampton and Leicester. Will he confirm that the city of Kingston upon Hull has staked a claim for a medical school in view of the fact that once we get over the Humber we shall have a catchment area of a million or more population? Can the hon. Gentleman say where we stand as regards having a medical school at our university?

Mr. St. John-Stevas: I know of the hon. Gentleman's interest in the subject but I am afraid that I can give him no undertaking that a new medical school will be started in that area. Our estimates are based on the need for doctors in the near future. We estimate that, with the two medical schools which have been planned and the expansion of existing schools, the need for doctors will be met fully.

Youth and Community Work

Mr. Bidwell: asked the Secretary of State for Education and Science if she will give her estimate of manpower targets for full time youth and community work posts for 1973–75; and what are the estimates of filling such posts.

Mr. St. John-Stevas: Local education authority returns giving the relevant figures for 1973 will not be available until March.

Mr. Bidwell: Does the hon. Gentleman appreciate that there is grave anxiety amongst those engaged in youth and community work about being able to fulfil manpower needs for the future? Does he agree that youth and community work is a vital aspect of education work, and will he undertake to look at this matter very seriously?

Mr. St. John-Stevas: I agree that this is a most vital sphere of the education service. It is the responsibility of my noble Friend the Under-Secretary of State. We are training more workers. About 160 youth service workers qualify each year on two-year full-time courses. In addition about 200 qualified teachers, graduates and others with relevant experience currently enter the profession in the course of a year.

School Transport

Mr. Hicks: asked the Secretary of State for Education and Science if she has yet received the report of her departmental committee investigating problems associated with school transport; and if she will make a statement.

Mr. Redmond: asked the Secretary of State for Education and Science if she will now make a statement on the findings of her Department's working party on the subject of school transport.

Mr. Ellis: asked the Secretary of State for Education and Science when she expects to receive the report of the working party on school transport; and if she will make a statement.

Sir Robin Turton: asked the Secretary of State for Education and Science when she expects to receive the report of the working party on school transport.

Mrs. Thatcher: I do not expect to receive the report of the working party on school transport for some time. When I receive the report I shall consider its findings and make a statement.

Mr. Hicks: May I impress upon my right hon. Friend the urgency of this situation? Is she aware that in rural areas such as Cornwall there is a widespread feeling that the present stipulations are outdated in the context of the situation and present-day needs?

Mrs. Thatcher: I constantly draw the attention of the working party to what hon. Members say during Question Time. But I stress that the working party has a substantial task
to review the present arrangements, including the existing law affecting the provision of school transport, and to report on changes which may be needed",
and this will take some time. In the case of Cornwall the chief education officer is a member of the working party, so Cornwall's interests should be looked after properly.

Dr. Marshall: Will the right hon. Lady draw the attention of the working party to the need to amend Section 55(2) of the Education Act 1944 to require local education authorities to give financial assistance to special school buses which have been provided as a result of the efforts of parents and teachers, as is the case at Old Goole in my constituency?

Mrs. Thatcher: That is one of the provisions in the terms of reference of the working party.

Mr. Redmond: Will my right hon. Friend take it that this is not just a matter for rural areas but is a very serious and confusing problem in close-knit boroughs such as Bolton? Has my right hon. Friend seen the reply sent to me by her noble Friend the Under-Secretary concerning a letter which I received from a constituent whose son had had his bus fare "pinched" in the school changing room? Was not the reply merely passing the buck to the local authority?

Mrs. Thatcher: I also know about the needs of places such as Bolton. But I draw my hon. Friend's attention to the fact that the assistant chief education officer for Lancashire is also on the working party.

Mr. Maclennan: Does the right hon. Lady agree that with the closure of rural schools many young children, especially primary schoolchildren, may have to travel very much greater distances to school than they did in the past? Prior to receiving the report which the right hon. Lady awaits, will she bear in mind that it is very important too that the buses in which the children travel should be modern and comfortable? What instructions or advice is the right hon. Lady issuing on this point to local authorities?

Mrs. Thatcher: None on that point. However, all these matters are properly within the terms of reference of the working party. Children who travel longer distances are likely to have their fares paid because those are covered. It is some of the shorter distances which can be along dangerous roads that cause the problem.

Mr. Grylls: Is Surrey's education officer on the working party? If not, why not? On a more serious note, may I ask my right hon. Friend to consider cases in which transport is not provided but children have to cross busy roads which often lead to motorways, causing great danger? Does she agree that this is a matter which the working party should look into?

Mrs. Thatcher: I am afraid that I cannot please my hon. Friend as well. Surrey's education officer is not a member of the working party. What is more, looking through the list of representatives on it, I cannot even get anywhere near Surrey.

Professional Standards and Qualifications

Mr. Jay: asked the Secretary of State for Education and Science whether she will resist proposals by the EEC for regulating professional standards and qualifications in the United Kingdom.

Mr. Body: asked the Secretary of State for Education and Science what steps the Government intend to take to resist proposals by the EEC for regulating professional standards and qualifications in the United Kingdom.

Mrs. Thatcher: Our attitude towards specific EEC proposals in this field will be determined after full consultation with the United Kingdom interests which would be affected.

Mr. Jay: Is the right hon. Lady aware that a great deal of concern has been expressed about this matter, notably by Lord Bowden of Manchester University? Will she undertake not merely to consult but to be guided by the professional bodies concerned before giving way to these damaging proposals?

Mrs. Thatcher: Yes. I have read Lord Bowden's speech. Indeed, I was at the same conference. I assure the right hon.

Gentleman that we are in full consultation with the particular United Kingdom interests, which would include the professional bodies, as the question of recognition of each qualification comes up.

Mr. Edward Taylor: Is my right hon. Friend aware that in Scotland there is great concern that harmonising with the EEC might result in the harmonising of standards between Scotland and England? Bearing in mind that traditionally Scotland has had graduate secondary school teachers, which we regard as very important, may I ask my right hon. Friend to assure us that she will take fully into account the interests of Scotland before any move is made?

Mrs. Thatcher: It would be difficult in this House not to take the interests of Scotland fully into account. I am sure that my hon. Friend will be pleased to know that we in England are tagging after Scotland in aiming at a fully graduate teaching profession.

Mr. Moyle: Will the right hon. Lady take the matter further and undertake that the British Government will have nothing to do with the standardising of professional qualifications on the basis of hours of instruction?

Mrs. Thatcher: I think that what I have said is correct. We are looking at each directive as it somes up, making our full contribution to it and consulting each of the professional interests. I cannot go further than that.

School Counselling and Careers Guidance

Mr. Roderick: asked the Secretary of State for Education and Science what proportion of the time of a school counsellor is taken up in careers education and guidance.

Mr. St. John-Stevas: The Department does not collect this information.

Mr. Roderick: Does the Under-Secretary recognise that the answer which his right hon. Friend gave to me on 29th January could be misleading since people would imagine schools counselling to be careers guidance in education? Will he make a statement indicating that there should be two separate services? Further,


will he take steps to set up an inquiry to consider the extent of a counselling service and the need to have a full-time department in each school doing this work?

Mr. St. John-Stevas: This is a very important sphere of the education service. There is a gradually growing acceptance that this subject should have an identifiable place in the academic curriculum. Meanwhile the number of full-time qualified counsellors is small, but a number of these will have attended in-service courses of short duration or longer courses lasting a year. Whilst specialist teachers are required, this subject should not be considered as being confined only to specialist teachers.

Mr. Cormack: Does my hon. Friend agree that it is of paramount importance that every secondary school should have a careers master who devotes much of his time to this subject and that by 1974 or 1975 every school should have virtually full-time careers guidance?

Mr. St. John-Stevas: As I said, this is an extremely important part of the education service. Most schools already have a part-time staff member who has special responsibilities in this sphere.

Mrs. Renée Short: That is not true.

Mr. St. John-Stevas: Yes, it is true. We are advancing towards a position where there will be more teachers employed full-time in this sphere.

Sixth Form Conferences

Mr. R. C. Mitchell: asked the Secretary of State for Education and Science on how many occasions Ministers from her Department have spoken at sixth form conferences during the last six months.

Mrs. Thatcher: Ministers accepted the invitations to speak in their personal capacities on five occasions in all. My Department was in no way concerned in the arrangements.

Mr. Mitchell: Is the right hon. Lady aware that the objection that many of us have to the recent series of conferences organised by the Conservative Central Office, in which at least one of her Ministers participated, was not to what was said at the meetings but to the

way that head teachers and local education authorities were deceived about the true nature of the conferences? Would it not be better if in future such conferences were organised by teachers, not by political parties?

Mrs. Thatcher: I am not responsible for the organisation of conferences by any political party. I am glad that the hon. Gentleman has no complaint about the speeches made by Ministers.

Mr. John Wells: Is it not about time that the natural Socialist bias of the teaching profession was overcome?

Mr. Lipton: rose——

Mr. Wells: On a point of order, Mr. Speaker. Did not my right hon. Friend hear my question?

Mr. Speaker: That is not a matter of order for me.

Mrs. Thatcher: I am sorry. I heard the first four or five words of my hon. Friend's question and the rest disappeared into oblivion.

Mr. Lipton: Has the Secretary of State——

Mr. Wells: rose——

Mr. Speaker: Order. It is not a matter of order whether the Minister hears a question or answers it.

Mr. Lipton: Has the Secretary of State received any applications from convents about the services of the hon. Member for Chelmsford (Mr. St. John-Stevas)?

Mrs. Thatcher: I am happy to report that my hon. Friend is in great demand everywhere.

Mr. Edward Lyons: asked the Secretary of State for Education and Science whether she will send a circular to local authorities about the question of holding conferences for sixth formers organised by political parties during school hours.

Mrs. Thatcher: No, Sir.

Mr. Lyons: Is not the crux of the issue that conferences are being organised in school time, as is the one due to take place in Bradford? Is it not the responsibility of the right hon. Lady that headmasters are expected to release boys and girls from school to attend conferences,


and should not conferences of this sort be organised outside school hours and preferably by the schools themselves?

Mrs. Thatcher: This House has given me no specific powers over secular instruction. Indeed, the history of British education has been to keep Ministers out of control of curricular matters and to put that control with either local education authorities or governors, who usually delegate it to the head teachers. I believe that they are the best judges in these circumstances.

Mr. Selwyn Gummer: Is my right hon. Friend aware that the reason for the coming sixth form conference in Bradford is that the headmasters of the schools involved, after having been asked whether they would like to withdraw, have insisted that the sixth form conference would be of benefit to their children and want the children to go?

Mrs. Thatcher: I was not aware of that, but I stress that I am happy to leave the judgment of these matters to the head teachers.

Mr. Heffer: Are not my hon. Friends wrong in objecting to members of the Conservative Party attending these conferences? I have seen youngsters appearing on television following such conferences and they are totally disenchanted with the Tories and will obviously never vote Tory because the Tory speakers at the conferences were so totally boring and useless.

Mrs. Thatcher: I am sure that the hon. Gentleman's implied request that there should be a conference in every area will have been noted by my hon. Friend the Member for Lewisham, West (Mr. Selwyn Gummer).

Mr. John Wells: Is it not about time that the natural Socialist inclination of the majority of the teaching profession was overcome?

Mrs. Thatcher: Whatever teachers' personal political views are, they have a duty, which I believe they discharge, to teach impartially.

Industrial Relations and Trade Union Studies

Mr. Golding: asked the Secretary of State for Education and Science whether she will approve the establishment

at polytechnics of courses leading to Council for National Academic Awards post-graduate diplomas in industrial relations and trade union studies separate from management courses.

Mrs. Thatcher: Proposals for new courses are considered on their merits, but I must have regard to existing provision.

Mr. Golding: is the right hon. Lady aware that it is most important that courses in trade union studies should remain in the social studies departments of polytechnics? Is she further aware that it is important that courses in trade union studies should not be put into management departments and treated as subsidiary sections in those departments?

Mrs. Thatcher: One of the problems is that, while a large body of opinion may now accept that those studies should be separate from management studies, many people hold the view that they should be an integral part of management studies.

School Uniforms

Mr. Carter: asked the Secretary of Station for Education and Science what has been the percentage increase in grants for school uniforms since 1970.

Mr. St. John-Stevas: This information is not available in the Department. The grants are made at the discretion of local education authorities.

Mr. Carter: Is not the hon. Gentleman being rather shy about these figures? Does he agree that the figure for school uniform grants is now almost equal to that for free school meals? The figures, which are now running at historic levels, graphically illustrate the appalling priority of the Government's social and economic policies. Does the Under-Secretary agree that under the present Government more families than ever before are unable to provide for the basic needs of their children?

Mr. St. John-Stevas: That statement is neither factual nor, more important, does it arise from the Question. There is no question of being shy about the figures. Local authorities have no obligation to submit schemes to the Department about their provision of school uniforms. As far as we can tell, grants are in the region of f12 to £15.

Expenditure

Mr. Jessel: asked the Secretary of State for Education and Science what was the total cost of educational services provided from public funds in the last financial year; and what proportion of this amount was carried by local authority rates and by the Exchequer, respectively.

Mrs. Thatcher: £2,646 million on education in England and Wales and on universities in Great Britain. Of this total local authorities spent £2,232 million and of this sum 45 per cent. was borne by rates and 55 per cent. by the Exchequer.

Mr. Jessel: In view of the burden of rates upon households, may I ask my right hon. Friend whether, from the point of view of her Department, she would see any objection to a larger proportion of the costs still being borne by the Exchequer and less by the rates?

Mrs. Thatcher: The proportion of the rate support grant has recently been increased with the very object of reducing the burden on the rates, and the contribution from the Exchequer has gone up steadily over the last few years.

Mr. Marks: Is the right hon. Lady aware that with the proposed monitoring of rates by the Department of the Environment there are dangers to the education service if authorities are asked to cut their rates? The dangers are in repairs to buildings, equipment and staffing. What part is the Department playing in this monitoring of rates and what steps is the right hon. Lady taking to see that the education service does not suffer?

Mrs. Thatcher: I think that I have taken great steps to see that the education service gets an increasing proportion of what is going. I think that it will continue to do very well from local expenditure. We will watch the point that the hon. Gentleman has made.

Secondary Education (Reorganisation Schemes)

Mr. Spearing: asked the Secretary of State for Education and Science what is the maximum period of transition she has permitted in a scheme to phase out

separatist secondary education in favour of a comprehensive system of secondary education.

Mrs. Thatcher: I have no powers to prescribe time limits within which statutory proposals approved under Section 13 of the Education Act 1944, as amended, must be implemented.

Mr. Spearing: I thank the right hon. Lady for that information. Will she confirm that any application for a change which extends over a period of, say, 10 years will not be turned down purely on the ground of the length of time it takes to initiate? Does she agree that that is not necessarily a matter on which she should turn down a scheme which may come to her at any time?

Mrs. Thatcher: On the whole we have not been asked to give approval to schemes taking that length of time. What usually arises is the other way round, at what point of time approval lapses if no steps are taken to implement it, and that would be a matter for the courts.

Frank Holland Collection

Mr. Faulds: asked the Secretary of State for Education and Science if she will support the setting up of a Piano Museum from the collection of Frank Holland in David Salomon's House, Tunbridge Wells.

Mr. St. John-Stevas: My noble Friend has no powers directly to assist the establishment of this museum. He has been in touch with the museum and indicated from what sources financial help might be sought. The museum would be free to apply to the Victoria and Albert Museum for assistance in purchases. The grant-in-aid for this purpose will, subject to parliamentary approval, be increased from £150,000 to £400,000 in 1973–4.

Mr. Faulds: May I simply thank the Under-Secretary of State for that typically helpful reply.

Rickets

Mr. Pavitt: asked the Secretary of State for Education and Science if she will take immediate steps to restore free school milk in the light of the evidence of the return of the disease of rickets.

Mr. Robert Hughes: asked the Secretary of State for Education and Science if she will now make arrangements for the free distribution of milk and vitamin D tablets to children of school age in the light of new evidence of an increase in rickets.

Mrs. Thatcher: No, Sir. Recent reports on the increase in the incidence of rickets are being considered by a panel of the Committee on Medical Aspects of Food Policy and it is too early to say what action may be needed.

Mr. Pavitt: Is the right hon. Lady aware of the report in The Times that there is now virtually an epidemic of a new form of rickets, biochemical rickets, which could be affecting 100,000, and that about 20 per cent. of the schoolchildren tested recently were found to have symptoms of rickets? Is it not time that she reversed her policy on school milk and made up for the mistake the Labour Government made on the same subject?

Mrs. Thatcher: The only evidence I have has been submitted to the Committee on the Medical Aspects of Food Policy. That was the evidence of the Birmingham trials which involved about 600 children between 14 and 17. Of these children, 133 were examined radio-logically and 24 displayed radiological evidence of rickets. All 24 were immigrant children; 17 were boys—12 Asian and five West Indian—and the seven girls were Asian. With respect, I think that this is a much more complex matter than the Press reports have given us to understand.

Mr. Montgomery: I draw my right hon. Friend's attention to an article which appeared in the Birmingham Evening Mail on 12th February by Dr. Trevor Cooke, a nutrition expert at the Birmingham General Hospital, in which he said that rickets will always be with us and advocated the remedy of dollops of cod liver oil? Are hon. Gentlemen opposite who complain about school milk being withdrawn recommending cod liver oil as a better substitute?

Mrs. Thatcher: I understand that the remedy appears to be a greater supply of vitamin D and that milk is not a rich source of this vitamin.

Oral Answers to Questions — BOOTLE

Mr. Simon Mahon: asked the Prime Minister if he will pay an early official visit to the county borough of Bootle.

The Prime Minister (Mr. Edward Heath): I have at present no plans to do so, Sir.

Mr. Mahon: I am sorry about that, Sir. The Prime Minister recently chided the people of Merseyside about their poor industrial relations. Did he do so in the full knowledge of the contribution made in recent years by the county borough of Bootle, and in the full knowledge that there are 50,000 unemployed on Merseyside? Will he bear in mind that not every strike on Merseyside is caused by a Liverpudlian or a person from Bootle? Many strikes, such as the IRO strike, are caused by outside interests and recalcitrant management. I appeal to the Prime Minister, as I have done once before, to give us the full co-operation of the Government in bringing 3,500 jobs, which are badly needed, to my constituents.

The Prime Minister: I agree with what the hon. Gentleman said about the influence of some outsiders. Far from chiding the people of Merseyside, what I did in that speech was to congratulate them on the immense amount they had already done to help themselves in the development of Merseyside in every possible way. I went on to say that the best thing they could possibly do for the future would be to improve the image overseas of their industrial relations. Far from this statement being questioned or myself being rebuked at the luncheon attended by representatives of Merseyside, it was applauded. I believe it genuinely to be correct. If the people of Merseyside can do more in this direction, they will be able to make more jobs available.

Mr. Redmond: If my right hon. Friend visits Bootle, will he bear in mind that not far away is Bolton, where industrial relations are excellent? I should like to introduce him to members of the AUEW, including shop stewards, who are fed up with the union's policy and tired of being told to go on strike when they do not want to.

The Prime Minister: Yes, Sir. Perhaps I had better stick to not going to one place at a time.

Mr. Heffer: Is the Prime Minister aware that there are no figures for strikes on Merseyside and there never have been? When one takes into account the strike statistics for the whole of the North-West, is it not wrong for the Prime Minister or anyone else to charge the workers of Merseyside with being irresponsible and strike-bound when there are no figures to prove it one way or the other?

The Prime Minister: If the hon. Gentleman is saying that there is nothing he can do to improve industrial relations on Merseyside, all I can say is that there cannot be a single person on Merseyside who believes that. Anyone who has any acquaintance with Merseyside—I know Merseyside intimately and have done so for the last 30 years—knows that there is much to be done to improve industrial relations on Merseyside.

Mr. William Clark: If my right hon. Friend goes to Bootle, will he make a statement of Government policy on the payment of supplementary benefits to strikers? Is he aware that taxpayers, including those who live in Bootle, are heartily sick of subsidising strikers and think that trade unions should pay strike pay and, if they do not, that there should be a notional deduction for it from supplementary benefits?

The Prime Minister: I realise that there is evidence of public feeling about this matter.

Mr. Prentice: The Prime Minister is fond of lecturing other people on industrial relations. Will be hear in mind that perhaps the biggest recent contribution to industrial unrest was the Government's monumental blunder yesterday in refusing to agree to a court of inquiry into the gas dispute? Does he realise that this comes on top of his unhappy handling of this question in recent weeks and that he therefore bears heavy responsibility for whatever consequences fall upon the nation as a result of this policy?

The Prime Minister: The right hon. Gentleman is absolutely wrong, and if he wishes to improve industrial relations he might adopt a more responsible attitude towards the subject. The gas board was

asked, as were the gas workers, to wait until the guidelines for stage 2 were published. The guidelines have been published, and the gas workers are now protesting, at a time of standstill, against the prospect of having considerable increases in wages within a national policy. The responsible attitude of any right hon. or hon. Member on the Opposition Front Bench should be to suggest that the law as passed by Parliament should be obeyed.

Oral Answers to Questions — PRESIDENT NIXON (TALKS)

Mr. Raphael Tuck: asked the Prime Minister whether he will make a statement on his official talks with the President of the United States of America.

The Prime Minister: I refer the hon. Gentleman to the reply which I gave in answer to a Question from the hon. Member for Brentford and Chiswick (Mr. Barnes) on 6th February.—[Vol. 850, c. 220–3.].

Mr. Tuck: Did the Prime Minister bring to the President's attention the disgust felt by the people of this country at the perfidy of the United States in continuing to import vast quantities of chrome from the rebel State of Rhodesia —[Interruption.]—the Conservative Members do not like it, Mr. Speaker, but they are going to get it [Interruption.]—thus setting the United Nations at naught and incidentally stabbing the United Kingdom in the back?

The Prime Minister: These were decisions of Congress and not of the Administration.

Mr. Dykes: During the discussions was my right hon. Friend able to compare notes with the President about the responsible way in which the American unions reacted to the US income restraint policies in comparison with the apparent attitude of our unions?

The Prime Minister: I discussed the American experience on prices and incomes policy both with Mr. Shultz of the United States Treasury and with the President. My hon. Friend is correct in what he said. The American unions cooperated in the standstill to the full. In stage 2, which had a 5½ per cent. limit


and not an 8 per cent. limit like ours, they co-operated to the full and they have gone for voluntary arrangements in stage 3 at the same time as the President has cut the social services budget by 5 billion dollars and all rents have been freed.

Mr. Thorpe: As the Prime Minister rightly noted that the decision on chrome was one of Congress and not of the President, are we to asume that the President wished to dissent from that decision?

The Prime Minister: The right hon. Gentleman must draw his own conclusions about the President's views. I was merely answering the point about where responsibility lay for the fact that chrome can be imported into the United States.

Mr. John Wells: Will my right hon. Friend confirm that one of the most important items in the President's anti-inflation policy is the production of more food at home, and will my right hon. Friend follow that by encouraging British agriculture to grow more food at home?

The Prime Minister: This was one of the first actions of the present administration when we had a special price review in the autumn of 1970. From that time onwards expansion has been encouraged in British agriculture, and the British farmer has responded to that encouragement.

Mr. Frank Allaun: Did the Prime Minster raise with the President the proposal by our Secretary of State for Defence for a West European joint nuclear military force? Does the right hon. Gentleman not realise that this would be absolutely fatal to our hopes of a peaceful settlement between East and West in Europe?

The Prime Minister: I have told the House on many occasions that the proposal which I put forward, and which is on public record, was for the French and British nuclear resources to be held in trusteeship, and that the President of France has said that he does not believe that it is timely or right to discuss this matter.

Oral Answers to Questions — LANCASTER HOUSE PRESS CONFERENCE

Mr. Dalyell: asked the Prime Minister what plans he has to hold another Press conference of the kind he held at Lancaster House.

The Prime Minister: None at present, Sir.

Mr. Dalyell: Whereas one might be hesitant to go so far as one of the Prime Minister's most respected hon. Friends, who declared himself in the House to be unnerved by the spectacle of Caesar under the Lancaster House chandeliers, was not the House of Commons the right place to make that statement?

The Prime Minister: As the House of Commons was not sitting, no, Sir.

Oral Answers to Questions — HONOURS LISTS

Mr. Dormand: asked the Prime Minister what recent representations have been made to him on his responsibilities for honours lists; and what reply he has sent.

The Prime Minister: I receive many suggestions of candidates for inclusion in honours lists. In general, I reply that these will be carefully considered. I receive very few representations about my responsibilities for recommending honours to the Queen; and those which I do receive mostly take the form of comments on individual recommendations, to which I reply as seems appropriate in each case.

Mr. Dormand: Will the Prime Minister accept that I believe that many worthy people have had their work recognised through the honours system? Is he aware, however, that there is a growing feeling in the country that honours lists are becoming irrelevant and even unfair? Will the Prime Minister take steps to see that the system is radically modified, or even consider its abolition?

The Prime Minister: No, I would not do that, and if the hon. Member is asking me about representations I receive, they do not include representations to that effect. On the other hand, I would be disturbed if the hon. Member thought that the system was unfair. It would be true


to say that successive Prime Ministers have done their utmost to ensure that this is not the case.

Mr. Rost: Will the Prime Minister give an assurance that when the time comes to offer an honour to the Leader of the Opposition, it will not be granted for his services towards European unity?

Mr. Leonard: Irrespective of the wider question of whether the honours list fulfils a useful rôle, will the Prime Minister consider the appropriateness of some of the honours handed out? Is it consonant with our membership of the Commonwealth that the Order of the British Empire should be continued? What justification can there be in 1973 for dishing out mediaeval titles like knights and barons?

The Prime Minister: If there is to be an honours list, titles of this kind are necessary. Many honours have an historical basis, and I think that people wish that basis to be maintained rather than that we should try to create fresh honours on each occasion.

Mr. Marten: What is the Prime Minister's view on hereditary peerages?

The Prime Minister: I made my view on hereditary peerages clear on 10th November 1970, a few months after I became Prime Minister. I said then that the institution of life peerages had made it inappropriate to recommend the creation of new hereditary peerages as a normal rule, but I did not exclude the possibility of doing so in special cases.

Oral Answers to Questions — SPORT

Mr Douglas: asked the Prime Minister if he is satisfied with co-ordination between the Scottish Office and the Department of the Environment with regard to sport.

The Prime Minister: Yes, Sir.

Mr. Douglas: Is the Prime Minister aware that we are celebrating the centenary of the Scottish Football Association? Is he also aware that in England, Scotland and Wales the game of soccer is in a serious state because of low attendances and of the lack of equipment in the grounds to ensure safety and so forth? Will the Prime

Minister undertake to discuss with the associations of these countries the future of the game and what Government assistance may be forthcoming, particularly through taxation?

The Prime Minister: My hon. Friend the Under-Secretary of State for the Environment has been having discussions. I recognise the validity of the hon Member's point. There are financial difficulties, but it must be recognised that the sport receives about £1 million from pool promoters under the copyright arrangements for use of the fixture list, so that a considerable sum accrues to the sport in that way. We welcome the creation of new grounds, and I do not believe that consultations which are taking place on the Wheatley Report on safety are delaying that development in any way.

Oral Answers to Questions — INFLATION (PRIME MINISTER'S SPEECH)

Mr. Carter: asked the Prime Minister if he will place in the Library a copy of his public speech in Maidstone on Friday 26th January on inflation.

The Prime Minister: I did so on 30th January, Sir.

Mr. Carter: In that speech the Prime Minister did not refer to the Government's economic successes, about which he has constantly told us. Will he tell us this afternoon the Government's three principle economic achievements and successes?

The Prime Minister: I have constantly reiterated them. We have had considerable success in dealing with the inflationary pressures which were left by the present Opposition—success which we are pursuing through the statutory policy. We have also had success in the regional inducements which we have given, which are beginning to provide the investment that is required. Furthermore, we have established a firm base for the expansion of the economy in the European Community.

Mr. Tapsell: Will not the country have noticed that one of the reasons why sterling has so far not been in the front line of the international monetary crisis is the respect that the international community pays to the phase 2 proposals?

The Prime Minister: That is absolutely right. If those Members of the Opposition who are concerned with increasing the number of jobs in this country, increasing our trade and improving the standard of living would demonstrate their support for the stage 2 policy it would have an even greater effect.

Mr. Molloy: If the Prime Minister has time to spare and really wishes to know the truth about increasing jobs and opportunity, would he like to come with me this afternoon and meet a delegation of lobbyists from Rockware Glass, in my constituency—a viable firm which is increasing its productivity year in and year out, and which is to be closed with no prior consultation simply because land developers are after the land that it is on? Men and management with a first-class industrial relations record are being subjected to asset strippers and land developers. How can that be reconciled with the statement the right hon. Gentleman has just made?

The Prime Minister: The hon. Gentleman knows perfectly well that if he wants to send details of a particular case to me I am always prepared to consider it, without his abusing the time of the House at Question Time.

Mr. Wyn Roberts: Did not the ORC poll show 76 per cent. of those interviewed in favour of the Government's current policy against inflation? Does not that indicate that the Government have widespread support in the country at large?

The Prime Minister: Yes, Sir. There is no doubt about the widespread support for the policy up and down the country, and there is absolutely no doubt that the great majority of the people want the policy to succeed and to deal with inflation.

Mr. Harold Wilson: Did not that same poll describe the right hon. Gentleman's offer for wages as £5 a week? Will he confirm that that is his offer?

The Prime Minister: The right hon. Gentleman knows perfectly well that the amount of the wage offer is £1 per head plus 4 per cent. of the wage packet as negotiated by those responsible for any group. As he also knows, there is an upper annual limit of £250. I under-

stand that many in the trade union movement and Labour Members object to having an upper limit. That is most astonishing.

INTERNATIONAL EXCHANGE RATES

Mr. Simeons: Mr. Simeons (by Private Notice) asked the Chancellor of the Exchequer whether he will make a statement on the position of sterling in the light of last night's announcement by the United States Treasury of the devaluation of the United States dollar.

The Chancellor of the Exchequer (Mr. Anthony Barber): Yes, Sir. I said yesterday that the consultations on the international currency situation were proceeding well. The whole House will be relieved that a solution has now been achieved.
Early this morning an announcement was made by the Secretary of the United States Treasury.
Its basic feature is a 10 per cent. devaluation of the dollar. This will involve a change in the official relationship of the dollar with SDR and gold. The Japanese authorities have indicated that the yen will be permitted to float. This also applies to the lira. Other major European currencies with fixed exchange rates are expected to reflect in full the 10 per cent. devaluation of the dollar relative to them. Sterling will for the time being continue to float but, as I have said before, we intend to return to a fixed parity when conditions permit.
The London Foreign Exchange Market was reopened this morning; but dealings are still affected by the uncertainties of the last few days.
I welcome these new arrangements. The House will agree that, compared with the events of 1971, which also led to a realignment of currencies, a solution has on this occasion been found with remarkable speed, having regard to the range of interests involved and the complexities of the issues. This would certainly not have been achieved without the intensive consultations which took place over the weekend. As the House knows, we have throughout kept in close touch with European colleagues. I would add in particular that the way in which the United


States, whose currency came under such severe pressure, has taken bold and constructive action in consultation with others, augurs well for future relationships across the Atlantic.
But if the immediate difficulties have been resolved, the clear lesson to be drawn from the events of the past few weeks or so is the paramount need for constructive and speedy progress towards a more efficient international monetary system. We now need resolute determination to achieve results, and this will be my purpose when I attend the meeting of the Committee of 20 next month in Washington.

Mr. Simeons: I am sure that the House will wish to congratulate all those who took part in reaching such a speedy conclusion, and in particular to acknowledge the part my right hon. Friend played. Did any discussions on a two-tier market take place?

Mr. Barber: Yes, Sir. In our discussions consideration was given to the idea of two-tier markets. They may be useful in some circumstances, and a number of countries operate them, but they should not be regarded as a panacea for balance of payments problems. Certainly their general adoption would not have provided the answer to the problems we faced at the weekend.

Mr. Healey: Does the Chancellor agree that the big difference between the Smithsonian Agreement and what has happened in the past two days is that in 1971 he very unwisely agreed to up-value with the European currencies, whereas on this occasion he has been prepared if necessary to float down with the dollar? May I congratulate him on putting the interests of economic growth in Britain before the Prime Minister's commitment to a European monetary union?
I should like to ask the right hon. Gentleman two specific questions, as according to Herr Schmidt in Germany he was clearly not prepared to have a joint float with the European currencies. First, what steps is he taking to protect the British public against the inflationary effects of a further devaluation vis-à-vis the European currencies? secondly, is he yet in a position to state the consequences of these actions for the British balance of payments under the

common agricultural policy and the contribution to the Common Market budget?

Mr. Barber: I do not agree with the interpretation that the right hon. Gentleman put upon the results at the Smithsonian and the results achieved on this occasion.
With regard to the right hon. Gentleman's remarks about the attitude of my right hon. Friend the Prime Minister and myself to the matter, it is natural, at any rate in the present Government, that the Chancellor should throughout have consulted the Prime Minister. I might add, since my hon. Friend the Member for Luton (Mr. Simeons) was kind enough to make some remarks about me, that my right hon. Friend has throughout the negotiations also played a part which has made a major contribution to the quick solution of the problems.
On prices, I would only say that at present, when we have no knowledge of the rates that will be quoted when all the markets are reopened—some of them are not now open—it is not possible to be precise about the effective sterling exchange rate compared with the position before the recent difficulties arose.

Sir H. d'Avigdor-Goldsmid: Is my right hon. Friend aware that a decision which eventuates in more and more currencies floating simply increases the risks at which all currencies find themselves? Is my right hon. Friend turning his attention to preparing our defences against the moment, which cannot now be so very far off, when the pressures mount against sterling?

Mr. Barber: I do not accept the assumption in the latter part of my hon. Friend's question. With regard to the first part of his question, it is a fact of life that the overwhelming majority of finance ministers throughout the world, including me, believe that the right regime for the world involves fixed but adjustable parities.

Mr. Jay: But if the floating of the pound has been such a great success, no doubt with the help of the right hon. Gentleman the Prime Minister, why does the Chancellor of the Exchequer intend to re-fix the rate?

Mr. Barber: For the simple reason that I believe, as do an overwhelming


majority of my colleagues throughout the world, that this is the best way to conduct international trade and payments.

Mr. Bruce-Gardyne: Would not my right hon. Friend agree that a return to fixed parities within the enlarged Community would enable this country to benefit not only from the mutual support provisions of the Treaty of Rome but also from the mutual discipline arrangements between Governments which might be very desirable, and is not it evident that the outcome of this latest crisis, involving the resolution of the two currencies which were most obviously out of balance, demonstrates the remarkable effectiveness of co-operation in a European context?

Mr. Barber: I accept the latter point and most certainly agree, because without that co-operation there is no doubt whatsoever that a solution would not have been found as quickly as it was. With regard to my hon. Friend's first point, I can only repeat that it is our intention to return to a fixed parity.

Mr. Healey: I wonder whether the Chancellor of the Exchequer could perhaps address himself to the question I asked earlier. He will be well aware of the trade figures which were published today which fully justify the decision he took not to stay within the "snake in the tunnel" agreement, and not to carry out the Prime Minister's promises at the Summit last October.
What the House and the public want to know is what steps he proposes to take to protect the public against further devaluation of sterling vis-à-vis European currencies and what he estimates will be the consequences for the balance of payments arising out of increased payments under the common agricultural policy and the Community budget.

Mr. Barber: If the right hon. Gentleman had listened to the answer I gave he would have noted that what I said was that, with some of the exchanges closed throughout the world at the present time and with the erratic nature of transactions which inevitably have taken place during the first few hours of this morning—for example, already the rate for sterling has been fluctuating between, I believe I am right in saying, 2·41 and 2·51 dollars—it is quite impossible at this stage and

until all markets are reopened to be precise about the effective sterling exchange rate compared with the position before the recent disturbances.

Mr. Pardoe: Is the right hon. Gentleman aware that, whatever may have been the fluctuations this morning, sterling seems to have settled down to an effective devaluation against European currencies of about 6 per cent.? Will he confirm that? Is he aware that while this will lead to short-term successes he still appears to have no long-term policy to solve the international monetary problem?

Mr. Barber: Is the hon. Gentleman will consider what I said in great detail when I addressed the International Monetary Fund in Washington, I believe he will take the view that what he said about a long-term policy is not borne out by the facts. With regard to his first point, it is surely self-evident—as I would have thought with respect anybody who knows how the market works will understand—that it is far too early to form a judgment on the rate at which sterling will settle down.

Mr. Harold Wilson: While the right hon. Gentleman is absolutely entitled to say that it is too early to form a view on half a day's trading in a half-open foreign exchange market and that more time is required to appreciate the full extent of the consequences of what has happened in the last few days, will he explain to the House whether the notional value put on sterling for common agricultural policy purposes at the end of last month is to stick? Is it immutable or is it subject to change in the light of what the final settling down of the sterling rate may be?

Mr. Barber: Whatever changes are made will be in conformity with the principles which have been already agreed. I certainly do not see any technical problems arising as far as that is concerned. The arrangements were clearly negotiated and if, because of a different rate for sterling in relation to the dollar, further adjustments are to be made in conformity with those agreed principles, they will be made.

Mr. Wilson: Of course I would agree with some of the right hon. Gentleman's earlier answers about not rushing to any


conclusions with regard to further devaluation of sterling, but because I and possibly other hon. Gentlemen may not be clear on this point may I ask him this question: when the notional rate of slightly over 2·35 dollars was fixed for the purpose of C.A.P., was it meant to be a binding rate for a period ahead or was it to be subject to change if the floating rate of the pound were to change? Are we bound to send the amount of money related to that, so that if the pound deteriorates further it means paying more money across the exchange, or would it be subject to the changing rate?

Mr. Barber: As I understand it, the amount is subject to adjustment in accordance with the principles agreed and therefore we shall be in consultation with our European partners to see whether, in the light of developments, any adjusment is required.

Mr. Cronin: Would not the right hon. Gentleman agree that one of the biggest problems in international monetary policy is the disequilibrum in Japan's external trade? Would he take steps to induce the Japanese Government to take a more co-operative attitude in solving this problem, particularly with regard to accepting more imports from Europe?

Mr. Barber: The hon. Gentleman is quite right in stressing the importance of Japan and of the yen as far as our previous imbalance was concerned. The United Kingdom is of the same opinion as the United States in placing great importance upon that. Of course, one of the consequences of the agreement which has been reached will be not merely that the prospects for United Kingdom exports to Japan will he improved as a result of this new arrangement but, conversely, that it will be more difficult for Japan to export to the United Kingdom.

MINISTRY OF TOURISM BILL

3.48 p.m.

Mr. Edward Milne: I beg to move,
That leave be given to bring in a Bill to authorise the establishment of a Ministry of Tourism with powers to lay down a code of conduct for the tourist industry and to consider and act on complaints made by holidaymakers regarding tourist facilities both in this country and in respect of travel overseas; and for matters connected therewith.
In the period since the end of the Second World War Britain has risen from being a minor tourist attraction to become a major world tourist centre, attracting well over 7 million people annually. This tourist explosion of unprecedented magnitude has also taken place in the travel habits of the British people. Around 9 million spend their holidays abroad and close on 6 million of these travel to Western Europe, particularly Spain and France. Nearly 60 per cent. of British holiday makers go abroad on package holidays. Travel and tourism is the greatest single unit in the world. It is easily the greatest growth industry in Britain.
That is why in this Bill we call for a Ministry of Tourism under a Minister responsible for regulating and developing the trade for the benefit of all those taking holidays in this country and people from Britain wishing to travel overseas on holiday.
A large amount of Government money has gone into the travel trade. What is needed now is a sound organisational framework to create a co-ordinating mechanism for the key elements in tourism, particularly the regional and local tourist and travel organisations. There must also be a revision of the powers of certain existing Government organisations involved in tourism and travel. The expansion of the tourist and travel trade during the last decade will undoubtedly pale into insignificance when compared with the colossal growth lying ahead in the next five to 10 years.
It is necessary for us in Britain to spell out that we mean business in the highly competitive world of international tourism. Since 1962 we have raised the question of travel trade registration. To the credit of the trade, and the Association of British Travel Agents and other


bodies, it has over the years taken steps to put its house in order. In view of the anxiety felt by many about the effects of inflation on package holidays, let me stress that holiday prices have at no time been too low or too cheap as is claimed by many in the trade. That prices should increase because they were regarded as uneconomic in the past is nonsense.
Let me quote from the Travel Trade Gazette of 21st September 1971. It reported that the travel industry
this week sharply refuted a warning by the Air Transport Licensing Board that package holiday prices were too low. Some holiday firms described the warning as nonsense. The Tour Operators Study Group said that the statement was 'patently ridiculous'.
The package holiday business is overwhelmingly run by 21 of the largest tour operators who are themselves mostly subsidiaries of airlines, hotel chains and shipping lines. They are generally opposed to legislation but as one leading North-East travel agent, a member of ABTA, said on this subject,
only villains need fear registration of the travel trade.
Although successive Governments have stated their opposition to the registration of the travel trade they have, nevertheless, intervened in a number of areas to assist in this direction. The Development of Tourism Bill was a big step forward. The Edwards Committee on British Air Transport in the 1970s, the Civil Aviation Authority's new licensing scheme for air travel organisers and a number of other measures have all helped to make it necessary to co-ordinate the travel and tourist industry and to bring it within the framework of a single ministry. Progress towards that end has made this Bill justified.
The Trade Descriptions Act 1968 has done much to help eliminate the false promises of the glossy travel brochures in which many travel firms were peddling dreams rather than reality. Within the framework of the Bill and against the background of the years during which we have tried to introduce legislation, much may have been done. More remains to be accomplished in protecting holidaymakers.
At last year's conference of the Institute of Weights and Measures Administration, most of whose members deal with much

of our consumer protection legislation, its chairman called for:
better protection for British tourists abroad against statements in holiday or travel brochures which prove false.
He said that inspectors had received more than 5,000 complaints in the past three years concerning such holiday experiences. He also suggested in that speech that the Trade Descriptions Act needed strengthening.
With the Institute talking about these 5,000 complaints, the Ministers responsible for tourism and consumer protection, who are with us on the Front Bench today, should pay much closer heed to this subject because these are only the complaints that have got through a very fine mesh.
It has been the tradition of this House to legislate on behalf of the consumer. I trust that the House will agree to the motion and allow the Bill to go forward to its Second Reading.

Question put and agreed to.

Bill ordered to be brought in by Mr. Edward Milne, Mr. Hugh D. Brown, Mr. Lewis Carter-Jones, Mr. Maurice Edelman, Mr. Robert Edwards, Mr. George Darling, Mr. E. Fernyhough, Mr. Leslie Huckfield, Mr. Laurie Pavitt and Mr. David Watkins.

MINISTRY OF TOURISM

Bill to authorise the establishment of a Ministry of Tourism with powers to lay down a code of conduct for the tourist industry and to consider and act on complaints made by holiday makers regarding tourist facilities both in this country and in respect of travel overseas; and for matters connected therewith, presented accordingly, and read the First time; to be read a Second time upon Friday 2nd March and to be printed. [Bill 68.]

ROYAL ASSENT

Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

1.Consolidated Fund Act 1973.
2.National Theatre and Museum of London Act 1973.
3.Sea Fish Industry Act 1973.

Orders of the Day — SUPPLY OF GOODS (IMPLIED TERMS) BILL [Lords]

Order for Second Reading read.

3.56 p.m.

The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe): I beg to move, That the Bill be now read a Second time.
This Bill is designed to bring up to date the important although not exactly modern consumer protection provisions contained in the Sale of Goods Act 1893. That statute was a codification of the common law as it had evolved by the end of the 19th century. A lot of things have changed since then. Two particular classes of transaction were then customary, and accordingly required attention from the law—first, commercial contracts of the kind essential to a mercantile trading nation; and second, those in which consumers generally dealt directly with the makers of the goods they wanted.
In both areas, and particularly the second, bargains were struck orally. The buyer could probably choose from several sources of supply. If he did not like the conditions which a supplier sought to impose he had the very real bargaining power of taking his custom elsewhere. In those circumstances, while it was sensible that the law should set out the rights of the buyer and the obligations of the seller that were implicit in every contract of sale, it was also not unreasonable that the parties to a contract should be allowed to strike a bargain on some other terms if they wished.
A set of rules of this kind can, however, work fairly only when there is more or less equality of bargaining power between buyer and seller. This is manifestly not so in the changed conditions of today.
Mass production and marketing and the increasing technological complexity of consumer goods have combined to increase the market power of producers in relation to consumers. The increasing size and cost of the factory units needed to produce goods has made the producers ever more remote from consumers. As bargaining through personal contact has become less and less practicable during

the last 80 years, as the consumer's bargaining power has declined, so has his chance of getting defective goods repaired or replaced. The balance has shifted a long way since 1893. This Bill will go part of the way towards redressing it.
As a first step consumers will have an inalienable right to be supplied with goods of reasonable quality. When the Bill becomes law it will no longer be possible in a consumer sale to exclude this or any other implied right provided by the Sale of Goods Act.
Consumers are of course interested in something more than their theoretical rights. They are anxious, in practical terms, to know that the quality of products is improved so that complaints do not arise in the first place. If that can be achieved, then there will be no need for redress.
The Bill is one of several steps that can be taken to help in that direction because it means that those whose products give rise to much complaint will in fact find themselves under greater pressure to improve their products by controlling the quality at source.
But the Bill, as I have said, is only the first part of a programme that will eventually transform this area of the law. Three other important complementary aspects of consumer law, in some ways overlapping, are under consideration by the Law Commissions at the present time. I should remind the House that the Bill is founded upon the First Report of the Law Commissions on Exemption Clauses in Contracts. I am sure the whole House will wish to join with me in expressing our gratitude to the Law Commissions for the work they have done on that task.
The other three areas they now have under review are exclusion of liability for negligence; the use of exclusion clauses in contracts for the supply of services; and reform of the law relating to product liability. They will no doubt be reporting fully on their studies in this complicated and difficult sphere of law as soon as they are able to do so. The House will know as well that the last of those subjects, namely, product liability, has also been referred to the Royal Commission under the chairmanship of Lord Pearson whose appointment was announced not many weeks back. Thus there is that next stage or series of stages of work still to be carried forward.
In the meantime in the area of product liability, the provisions of Part III in particular of the Fair Trading Bill will enable the Director-General of Fair Trading to take action against manufacturers who consistently produce shoddy goods so that he will be able to contribute at an early stage, and alongside the provisions of this Bill, to the raising of standards.

Mr. George Darling: This is a point that frequently crops up. Nobody wants to stop a manufacturer producing shoddy goods if the customer wants to buy shoddy goods, in other words, cheap goods. Surely what the Minister means is that nobody wants the manufacturer to produce goods that will be misdescribed?

Sir G. Howe: As the right hon. Member for Sheffield, Hillsborough (Mr. Darling) knows, there are two parts to this problem. First, plainly the consumer is entitled to protection from misdescription, but he is also entitled, up to a point about which there could be a great deal of debate, to the assurance that the generality of goods that he will buy will not fail the first time they are on the road, so to speak.

Mr. Darling: This is fitness for purpose.

Sir G. Howe: Indeed. There are certain products which, it is possible to argue, are manifestly designed to be sold cheaply and nobody would expect them to be other than cheap in quality. That is one of the factors embodied in the new definition of "merchantable quality" in the Bill. But in general terms most consumers would surely like to move into a situation where 99 out of 100 washing machines that they bought were likely to be jolly good washing machines that did not break down.

Mr. Darling: One hundred.

Sir G. Howe: The right hon. Member for Hillsborough puts his target higher than I do. What we want to try to do, therefore, is to move in that direction.
If in a regular pattern goods or commodities fall below the standards one is entitled to expect so that 10 out of 100 consumers are receiving bad treatment in relation to a particular brand of goods,

the effect is to saddle 10 out of 100 people selectively with the costs of getting a bad buy. It must be better, therefore, to raise standards across the board, even if that means that we are all paying slightly more as an insurance policy for ensuring that we all receive good goods.
It is in that kind of way that the Director-General of Fair Trading, exercising his powers under Part III of the Fair Trading Bill, will be enabled to contribute to the raising of standards. We shall be moving towards what I described as the ideal objective, namely, a decisive reduction in the number of occasions on which consumers will need to seek redress from the law.
Against that background perhaps I might say a few words to the House about the steps which led to the present legislation. As the House will be aware, certain terms are at present implied in all contracts of sale of goods. They are set out in Sections 12 to 15 of the Sale of Goods Act. The terms are either "conditions", breach of which entitles the injured party to treat the contract as rescinded, or "warranties", breach of which gives the injured party the right to claim damages for any loss incurred.
Four particular aspects of the contract are covered. First, as to title, there is an implied condition that the seller has a right to sell and implied warranties that the goods are free from any undeclared encumbrance, to use a curious piece of legal jargon, and that the buyer will have quiet possession. Second, where goods are sold by sample, there are implied conditions that the bulk shall correspond with the sample and that the goods shall be free from any defect not apparent from the sample. Third, where a sale is made by description, there are implied conditions that the goods shall correspond with description and be generally of merchantable quality. Finally, if the buyer makes known a particular purpose for which the goods are required, there is generally an implied condition that the goods supplied will be reasonably fit for that purpose.
The problem as it presents itself in modern times arises from the provisions of Section 55 of the 1893 Act which allows the rights provided for in the sections to which I have referred to be excluded by agreement between the parties. The average buyer expresses his


agreement on such matters by signing the contract, but any exclusion clause it may contain is seldom, if ever, explained. The buyer may thus relinquish his rights unwittingly but even if the buyer was not unwitting, he might be unable to buy the goods anywhere else on other terms.
This problem was given particular attention some 10 years ago by the Committee on Consumer Protection under the Chairmanship of Sir Joseph Molony. The Committee saw no justification for allowing traders to repudiate at will the obligations placed upon them by the 1893 Act. The Committee commented
We feel compelled to view the practice as a general threat to consumer interests, in the sense that heavy and irrevocable loss may fall on the consumer who is unlucky enough to get a defective article.
The Committee also suggested a number of improvements in certain of the implied conditions and warranties. This proposal had implications for contracts of sale generally and the whole subject was according referred to the Law Commissions. The Commissions reported on this subject in 1969. They unanimously endorsed the view of the Molony Committee that private consumers should have an inalienable right to the protective provisions of the Sale of Goods Act. Sellers should not be allowed to exclude them in consumer sales.
The Commissions considered that these implied rights constituted a basic code of fair dealing on which consumers should in all cases be entitled to rely. In one respect they recommended that business buyers should also have an absolute right to protection: it should not be possible, they recommended, in any sale to exclude the implied conditions and warranties relating to title.
The Law Commissions were not, however, agreed about the extent to which any change should be made in connection with exclusion of other implied rights, that is to say, rights not relating to title, in business sales. Alternative recommendations were therefore presented in the report. It is important to notice that neither of these alternatives went as far as an outright ban on exclusion clauses in all business sales. That particular course, the idea of an outright ban on exclusion clauses in all business sales, was strongly urged on the Commissions

by some organisations representing the retail trade.
They considered that if retailers were not to be allowed to exclude their liabilities to customers, no such exclusion should be permitted at any point in the supply chain from manufacturer to retailer. The Commissions' report makes it clear that they considered that, although appropriate protection was certainly needed, freedom of contract need not be totally restricted away from the consumer front. I will explain the consequences of this approach at the appropriate place in the Bill.
The Bill is designed to meet four main objectives. First, it restates and brings up to date the implied conditions and warranties set out in Sections 12 to 15 of the Sale of Goods Act. I have already rehearsed, if not recited, those provisions. I confess that it is somewhat to my surprise that, about 21 years after having laboured to learn those provisions in the course of my LL.B. course at Cambridge, in company with several other hon. Members, I find myself proposing that Parliament should rewrite that which took me so long to learn.

Mr. Greville Janner: About time.

Sir G. Howe: The hon. and learned Gentleman may be right.
Secondly, the Bill makes void exclusion clauses in consumer sales. Thirdly, in business sales it makes void exclusion clauses relating to title. Fourthly, it regulates the exclusion in business sales of the other implied conditions and warranties of the Sale of Goods Act.
To protect the consumer fully, it was decided that the Bill should meet these objectives both in respect of sales of goods for cash and on credit. The Bill therefore extends as far as possible in exactly the same way to hire-purchase, conditional sale and credit-sale transactions. It was also thought appropriate, with a rare intuitive flash of imagination, to bring the exchange of trading stamps for goods within the scope of the Bill.
The first three clauses of the Bill repeal and re-enact Sections 12–14 of the principal Act. Section 15, which relates to the conditions implied in sales by sample, remains unaltered. A number of improvements have been made to the implied


rights largely following the Commission's recommendations.
The main changes of that kind are, first, that provision is made for sales of limited title, under Clause 1. Secondly, sales in self-service stores—places of which Chalmers no doubt never dreamed in 1893—are to be regarded as sales by description, under Clause 2. Thirdly, with certain exceptions, Clause 3 imposes an implied condition that goods supplied in any sale made in the course of business shall be of merchantable quality, which is defined for the first time in Clause 7.
These changes are important in themselves but the heart of the Bill lies in Clause 4, where the provisions are contained which will deal with the central cause of complaint—the exclusion of statutory rights. Subsection (3) prevents exclusion in any sale, whether to a customer or in the course of business, of the implied rights relating to title, freedom from encumbrance or quiet possession. Subsection (4) gives effect to the view of the Molony Committee and the Law Commissions that in consumer sales any exclusion of the other implied conditions and warranties of the Sale of Goods Act should be void. A "consumer sale" for this purpose is defined in subsection (7).
The House will notice that the definition excludes sales by auction or competitive tender. Auction sales are often used as a means of selling consumer goods to private buyers, but it is considered that they have certain special features which set them apart from other and more usual methods of selling. It has therefore seemed right, although the Law Commissions did not reach a unanimous conclusion on this point, to exclude both auction sales and sales by competitive tender from the definition of "consumer sale."
Before I leave the subject of consumer sales, perhaps I might emphasise once more that once the Bill becomes law any exclusion clause in a contract for a consumer sale will be invalid. If traders continue after the Bill becomes law to include such exclusion clauses, consumers who are not aware of this legislation might well be misled into thinking that their rights had been limited or excluded altogether. This is a problem which may deserve further consideration. If the practice of including apparent exclusion

clauses, although they are invalid as a result of the Bill, remains widespread, as it should not do, it will be possible for the Director-General of Fair Trading to consider whether that practice should be proscribed as an unfair trading practice.
I turn now to the extent to which exclusion clauses should be permitted in business sales. Proposals for dealing with this are in Clause 4, subsections (4) to (8). All shades of opinion were voiced in the wide consultations made first by the Law Commissions and later by the Board of Trade, as it then was. At one end of the scale were those which advocated absolute freedom of contract, but this would impose a burden on retailers who would not be able to exclude their liability to their customers, and it could be unfair to others in the supply chain between manufacturer and retailer, whose bargaining power is limited.
At the other end of the scale, it was suggested that exclusion clauses should not be allowed in any contract of sale. This would certainly protect those in a weak bargaining position but would introduce too great an element of uncertainty into the law of contract, and manufacturers could never be certain of the limit of their liabilities.
As I have said, the Law Commissions were unanimously agreed on the need for some protection for non-consumer purchasers of goods but were not able to agree on a recommendation to deal with this difficult problem. The first suggestion was that the bar on exemption clauses should cover the sale of consumer goods to business purchasers except where the buyer could be said to be in the business of dealing in or with the goods. That would cover, for example, someone in business as a farmer who bought a car for the purpose of his business. He would be entitled to benefit from the ban on exclusion clauses because, although he was a business purchaser, he could not be said to be in business of dealing in or with those goods. The other alternative proposed that the courts should be enabled to strike out any exclusion clause in a business sale if in all the circumstances to allow the seller to rely upon it would be unfair.
After further consultations with a wide range of interested organisations, and considering several other possible solutions, the Government decided that


exclusion clauses should be allowed in business sales subject to a test of reasonableness. This means that the court will be enabled by the provisions of Clause 4 to strike out exclusion clauses in cases where it can be shown that it would be unreasonable to allow sellers to rely on them.
This was a difficult decision to make and was not taken without very careful consideration. Of the possible courses open to deal with the problem, it strikes the best balance between, on the one hand, preventing strong sellers from imposing onerous conditions on weak buyers and, on the other hand, allowing those with equal bargaining strength to deal with each other on whatever terms they choose.
Whether or not it is reasonable to allow reliance on an exclusion clause will he decided in the light of all the circumstances of the case. But guidance has been given to the courts, in Clause 4(5), on the factors that it will be generally important for them to consider. These guidelines have been generally based on the recommendations of the Law Commissions and have been shaped further in the light of consideration in another place.
The remaining provisions of the Bill are designed mainly to deal as far as possible in an exactly similar way with hire-purchase agreements and to apply the provisions appropriately to conditional sales and the redemption of trading stamps for goods.
I hope that I have sufficiently explained the provisions of this important and significant measure. I should like to apologise in advance to the House, and in particular to the hon. Member for Swansea, West (Mr. Alan Williams), because I have an engagement shortly. It has been thrice adjourned and is therefore of very long standing. I really must keep it. I hope that the hon. Gentleman will forgive me, therefore, if I disappear from the Chamber during his speech. I shall have the advantage of reading his eloquent words transcribed in HANSARD tomorrow.
The Bill is an important step along the road to a comprehensive framework of consumer protection. We recognise that there is a great deal more to do, but the

Bill will give the consumer a much bigger leverage in seeking redress than he has had before. Sellers will be under greater pressure to consider the quality of the goods they supply. To the extent to which that contributes to a general raising of standards, consumers will have moved a big step forward to the ideal of being supplied with goods that meet their needs without giving ground for complaint.

4.20 p.m.

Mr. Alan Williams: I am deeply offended that the Minister feels it an advantage to read my speech tomorrow instead of having to listen to it today. However, we have been locked for a considerable time not in mortal conflict but certainly in verbal conflict in the Committee stage of the Fair Trading Bill, and I can quite understand that he now wishes to forgo the pleasure of actually hearing me deliver my comments.
It is a pleasurable experience after a degree of disagreement in that Committee—though the disagreement has never been personal—to be in a position today to deal with what can be called a consensus Bill. This is not a political Bill and can be said to be a non-party measure. The Bill had its roots in 1966 when the then Lord Chancellor set up an inquiry and asked the Law Commissioners to look into the overall problem. The present Government—I give them credit for it—have readily taken up the Law Commission's report.
I wholly agree with the Minister that the Law Commissioners deserve our praise and congratulations for the thorough way in which they investigated the problem. It is a tribute to their efforts that so few changes have had to be made in their recommendations.
I would go a little further than the Minister and congratulate the noble Lords in another place who took part in the various stages of the Bill. Anybody who has read the proceedings in the other place will appreciate that there was a good deal of all-party effort to improve the original Bill. Consideration of the Bill by noble Lords was constructive and helpful, and led, in a non-partisan sense, to improvements in a Bill which we all want. The other place has saved us a good deal of time and, I suspect, may well have shortened the eventual Committee stage of the Bill in this House.
The Minister has already pointed out that the Sale of Goods Act is 80 years old, and even 80 years ago it was not a new piece of legislation, nor was it an innovating Act; it pulled together all the existing law. Therefore, we are trying to remedy a considerable desert in bringing in new legislation to protect the consumer in the sale of goods.
The 1893 Act was built around certain clearly known concepts. One paramount consideration was that contract was free because it was a contract between equal partners. Although that may have been true in those days, it is certainly not true today. It was built on the Roman law concept of caveat emptor—"Let buyer beware." That warning is every bit as relevant today. It was also based on the common law assumption that goods should be in a marketable condition for the purpose for which they are intended. One corollary of the concept of contracting equals was that if those equal partners agreed to waive the supplier's liability, they were able to do so. The world in 1893 must have been idyllic. Nobody had ever heard of the Motor Agents Association…
Since 1893 there has been 80 years of change. Some has been spontaneous change; some has been deliberate and systematic erosion of consumer rights. Instead of equal partners in a free contract, the power of the seller has grown. It has grown because of changes in marketing methods, the influence of advertising, the development of mass production, and the consequential market domination by a relatively small number of firms in key areas.
In addition, the greater intricacy of goods has meant that a consumer needs greater expertise at the time of purchase in assessing the merits of goods. It has been a time in which the seller has (become commercially stronger, but a time when the shopper's job has become more difficult. Abuses by sellers have become increasing subtle, sophisticated and widespread. The increase in the consumer's difficulties has not occurred purely as a result of spontaneous market changes. It has also been the result of deliberate and calculated erosion. Legal expertise has been purchased by firms to frustrate the intentions of Parliament

when the Act was originally passed. It is a reasonable guess that company lawyers have already been put to work looking for loopholes in this legislation before it has even reached the Statute Book.
The suppliers have had a good run, and the exclusion clause, the phoney guarantee, has been a major factor. As the Molony Committee said in paragraph 435:
The overriding argument in favour of prohibiting contracting-out is that it enables well-organised commerce consistently to impose unfair terms on the consumer and to deny him what the law means him to have.
If any groups of people have brought this Bill on their own heads, it has been the car manufacturers the Motor Agents Association and the electrical appliance industry. In recent years if anybody wanted to buy he could buy only on the terms set down by the Motor Agents Association, the car producers and the manufacturers of electrical appliances. To buy he had to surrender the legal rights which Parliament meant him to have in exchange for phoney guarantees.
The Motor Agents Association standard so-called "order form" is a moral disgrace. On the back of it, in the small print, there appear over 1,000 words in 10 clauses imposing the motor agents' own terms. I should like to quote what was said by Lord Janner in the other place on this matter, and I am delighted to see a member of that family in this House this afternoon to take up the argument.

Mr. Greville Janner: I started it.

Mr. Williams: I do not intend to trigger off a bitter family feud. I have known the hon. and learned Gentleman's father longer than I have known him, and I am inclined for my own peace of mind, since I bump into his father regularly, to take his father's side. The noble Lord said of the Motor Agents Association's order form, that it was:
an order form designed to cut down the rights of a purchaser to the bare minimum."— [OFFICIAL REPORT, House of Lords, 16th November 1972; Vol. 336, c. 870.]
It is necessary to read 36 lines, 330 words, before coming to the exclusion clause. The exclusion clause appears at the end of a sub-clause and says:
such undertakings are given and accepted instead of and expressly exclude any other


guarantee or condition or warranty as to quality or fitness for any purpose.
It is understandable that the average person wishing to buy a second-hand or a new car would not plough through all the details. It is doubtful whether he would be allowed the time to do so. It is astonishing that businessmen who would never dream of evading a tube fare and would look askance at anyone who was picking somebody's pocket will freely, without compunction, rob the public of essential rights as clearly as if they took money from them.
Which?, in a valuable report, pointed out that in 1972 one in 10 new car buyers —that is, people buying a car within a year of its being new—had some major trouble with either the gearbox or the transmission. Therefore, they were without the car for which they had paid, yet they had to incur the cost without compensation for alternative transport. To them there was a loss of money, but there was no compunction on the part of the businessmen who impose what I describe as phoney guarantees. They were denying the public the rights which Parliament intended them to have.
The practice has become so widespread that there is a danger that the public have ceased to realise what rights remain. It has become equally widespread relating to electrical appliances. A firm such as Philips—I am not suggesting that it is necessarily more at fault than some other firms—would be jealous of its reputation in other respects, yet twice in its so-called guarantee labour costs are excluded. That happens in the preamble, and under condition 4 the guarantee reduces the consumer's rights to have usable goods. The consumer has to pay not only the labour costs under the guarantee but the cost of the package and carrying of the goods to the manufacturer for repair.
Some High Street electrical appliance firms are so contemptuous of the need to meet consumer requirements that they do not offer a meaningful after-sales service. I know that the right hon. and learned Gentleman made the point that it is an inalienable right that will be given to the consumer. For personal satisfaction I want confirmation, which I am sure will be readily forthcoming, that firms which are offering retail goods which

are heavily cut in price, as against the manufacturer's recommended price, will not be able to say that the cut is in lieu of rights which we intend the consumer to have. I am sure this is the case; otherwise it would be open to manufacturers to fix an artificially high recommended price and escape in that way. I am not a lawyer but I assume that that sort of abuse would not be permitted. I should welcome an assurance on that point.
There has been such proliferation of exclusion rights that the public do not realise that the guarantees which they sign may limit their rights vis-à-vis the manufacturer and not necessarily vis-à-vis the seller. In other words, there may still be a course of action against the retailer even under the law as it stands although the spurious guarantees have been signed.
The consumer has become so punch-drunk that he permits the further illegal erosion of his rights. I shall quote from a useful background brief provided by the Consumers' Association for hon. Members taking part in this debate. The association makes the point that the retailer might point to the words in the guarantee and say that they entitle him to charge for the labour involved in the operation. The association's brief then says:
But I could, if I knew the law well enough, turn round and say that the guarantee has nothing to do with it because it is the contract of sale with him which counts, not the manufacturer's guarantee. For all that legally you may still have rights against the seller unaffected by the exclusion clause in the guarantee, you will find that 99 times out of 100 it is impossible to get this set put right without having to pay.
The example was taken of a television set. The brief continues:
… it is impossible to get this set put right without having to pay the charge.
In other words, the presumption on the part of the consumer, under the law as it stands, and even genuinely in many cases on the part of the retailer, is that the retailer is also covered by exclusion clauses relating to the manufacturer and the consumer.
By their very existence, phoney guarantees deprive more people of their rights than they are entitled to by their legal impact. I am trying to emphasise that the existence of exclusion clauses inevitably creates an atmosphere in which the


public become uncertain and doubtful of their rights and tend to assume that the rights no longer exist. For that reason it is important to realise that the Bill is only half a Bill in the sense that the right hon. and learned Gentleman rightly pointed out that as yet it does not cover the service sector of consumer transactions. One noble Lord claimed that exclusion clauses are more common in relation to services than they are in relation to goods. Various examples were alluded to, such as the carriage of goods, parking, laundry, and holidays. Until these services are covered, and because there are so many of them and because the public are so constantly coming into contact with them, the balance of public experience will inevitably make people doubt how far their rights exist.
It is imperative that as soon as possible we extend the protection to the service sector. I quote as a typical experience the situation facing the ordinary consumer and the contents of a Swans holiday booking form. Clause 1 of the booking form says:
There will be no contract between Swans Tours Limited … and the person making the booking … until the Booking Form is signed by the Client.
Therefore, one cannot enter into any meaningful contract without signing the booking clause. When one turns to Clause 8 it is found that one's rights are considerably eroded. I should be grateful if we can be told as soon as possible when we can see the coverage extended to services.
My hon. Friend the Member for Blyth (Mr. Milne), in moving his Ten-Minute Rule Bill, tried to give extra protection for tourists, and indicated the magnitude of the problem which has existed in recent years. The problem may be even greater this year because of the ruling by the Lord Chief Justice in the case of Beckett v. Cowen, which has led to a situation where it is clear that the circumstances which we thought we had covered are still open to abuse. If future promises on which a tour brochure is built are excluded from the Trade Descriptions Act it is important to give whatever extra protection we can as soon as possible to tourists. I will not divert into the need for a variation in the Trade Descriptions Act. I have made that statement during Question Time on previous occa-

sions. It is of paramount importance that it would be brought forward as soon as possible. We are well into the booking season, and it is unfair to expect people to take the risks which they are now taking whilst not having the legal coverage which until a short time ago Parliament thought had been given to holidaymakers. There is this urgent need to close the Trade Descriptions Act loophole, and there is also the need to ensure that we cover services in terms of exclusion clauses and phoney guarantees.
I said earlier that this is clearly a non-controversial Bill which will be supported by members of all parties. It is equally clear that this is so when one reads the reports of the debates in the other place. I was especially glad that the Lord Chancellor felt able to accept the recommendation of the previous Lord Chancellor and that of the Law Society that the guidelines should be more clearly written into the Bill. I appreciate the balance of danger that the Government have to face here in that once they start to list guidelines anything accidentally left out may provide potential loopholes. But on balance Lord Gardiner and the present Lord Chancellor were correct in coming to the conclusion eventually that it was better to build in a greater degree of certainty for those whom we are trying to protect. What is more, it will mean that more people will be encouraged to take legal action when they feel that they face an abuse against the intentions of the Bill.
In view of the scope that this legislation opens up for small claims actions on the part of consumers it would have been helpful if, concurrently with, though not necessarily in, the Bill, we could have been seeing the extension of small claims courts throughout the country. This type of legislation adds even more to the need for such courts. I was disappointed to read in The Times on Saturday a report of the speech made by the Minister for Trade and Consumer Affairs in which he seemed to turn his face strongly against the small claims court. The type of abuse that we are trying to eliminate could easily be taken to an informal, low cost small claims court by members of the public who might be afraid of the greater formality of the existing court structure.
While I regret that the Minister has turned his face against the small claims


court, it would be wrong for me to pursue it further today. The right hon. and learned Gentleman and I seem to have a fairly regular commitment to discuss matters relating to consumers on Tuesday and Thursday mornings, and I suspect that we shall soon be meeting on other occasions as well. It would be more appropriate to raise these matters in the Committee considering the Fair Trading Bill rather than here.
The Government will be aware that the National Chamber of Trade has a special interest in the Bill. There has been an exchange of correspondence between the National Chamber of Trade and the Earl of Limerick. I gather that the Government maintain that the protection which is really needed for the small shopkeeper is implicit in the Bill and that this is so especially in the case of the new guidelines. The National Chamber of Trade represents a large number of small shopkeepers. If there is a genuine misunderstanding and the Government are convinced that the case put forward by the National Chamber of Trade can be answered, why do they not accept the request made by the National Chamber of Trade on a number of occasions, the most recent being 3rd January, to meet and talk about the Bill? I hope that when he replies the Under-Secretary of State for Trade and Industry will agree that for what may be a relatively small expenditure of his time he ought to be able to clear away a good deal of misunderstanding in a way that could be transmitted by the National Chamber of Trade to a large number of shopkeepers throughout Britain. It is right that they should know what their protections are It is equally right that they should know what their new obligations are.
I regret that at a time when we are considering giving extra protection under the Bill to the purchaser of a new car another department is concurrently putting at risk the existing protection for the purchaser of a second-hand car. I have raised this matter with the Minister for Trade and Consumer Affairs during our debates on the Fair Trading Bill. It seems that the Trade Descriptions Act protection may he damaged in the case of a second-hand car by the decision to replace the log book by a registration document giving minimal information.

For example, there will be no list of previous owners, it will be difficult to double check the mileage of a vehicle, and it will be even more difficult to double check the number of accidents in which it has been involved since it will no longer be possible to check the colour of the car. Even worse is the decision to abolish the practice of stamping the log book when a car has been written off.
This decision creates a situation which puts the honest trader at greater risk because he does not have necessary information enabling him to know that he is conforming to the Trade Descriptions Act, and it gives the dishonest trader an unprecedented opportunity to cheat and swindle the public. I hope that the Government will reconsider this decision. It would be a pity if in stopping one set of abuses in the car trade the Government enabled a completely new set to begin. I do not think it is too late for the decision to be modified.
It is imperative that we give the maximum publicity to the new rights being established so that people will be encouraged to fight their cases against manufacturers. We shall be glad to hear the Under-Secretary of State explain how the Government intend to publicise the changes being introduced.
We have no wish to delay the progress of this Bill. The Committee stage may well be brief and amicable, the more so because it is brief. I welcome the Bill. It has the support of all parties. The Opposition are glad to see it.

4.48 p.m.

Mr. Philip Goodhart: As the hon. Member for Swansea, West (Mr. Alan Williams) rightly said, the discussion about exclusion clauses has gone on for a very long time. Referring to exclusion clauses, some 15 years ago the magazine Which? quoted a judge as saying that a contract was so one-sided he was surprised to see it written on two sides of the paper. A number of us have had experience of contracts of that kind.
More than 10 years ago I thought of introducing a Private Member's Bill covering some of the ground now covered by this admirable Bill. Naturally enough, I went to the Consumers Association which in turn consulted its lawyers who found that in the 70 years which had elapsed


since the passing of the Sale of Goods Act 1893, there had not been a single case in the High Court to test whether these exclusion clauses could override the basic provisions of the Sale of Goods Act.
The reason why this point has never been tested in the High Court in that 70 years is, I think, perfectly plain. It is that in 99,999 cases out of 100,000 it is just not worth while for the consumer to exercise what legal rights he may have under the Sale of Goods Act because the legal costs of trying to establish his rights will be infinitely greater than the value of those goods.
In my constituency I know of only one constituent who has tried to defend his rights under the 1893 Act. That man happened to be on National Assistance. He got full legal aid, every bit of legal aid he could get, and won his case on every point. Yet he kept returning to see me at my surgery and asked, "Why did I lose?" I kept saying, "You did not lose; you won", but he said, "I must have lost because I am worse off now than I was when I brought the action." This sort of situation is not good enough.
I would reinforce, if I can, the remarks made by the hon. Member for Swansea, West who referred to the need for a small claims court. That seems to be an essential parallel reform with this Bill. I am not so pessimistic as he is about the views of my right hon. and learned Friend the Minister for Trade and Consumer Affairs. I hope that with his colleagues he will have a very close look at the experience in the State of New York, where a small claims court has been operating with enormous success for a number of years.
Quite clearly, this Bill will have a very substantial effect even if very few cases arise from it in the courts. Clearly it will have have a most important effect in the motor industry. The hon. Member for Swansea West quoted from a report which appeared in Motoring Which? in July 1972. The magazine circulated 25,300 of its subscribers and discovered that 10 per cent. of all cars less than one year old had some major trouble in the gearbox and transmission. The magazine did not contact me. I seem to be statistically even more unfortunate than the average individual. In the course of the last five years I have

purchased two Rover cars. The Rover appears from this survey to have a better than average reliability record, but both my cars developed major gear box trouble in their first year.

Mr. Greville Janner: It depends on how one drives.

Mr. Goodhart: It is supposedly a foolproof gearbox, one which is proof even against my gear changing. My ability in this sphere apparently transcends modern technological development.
Perhaps the most important effect of this Bill will be to override clause 3(b) of the Motor Agents' Association order form. This will have a most important effect because it means that people who have cars on guarantee will not only be able to get a part replaced and the full cost met, but will also be able to hire a car to take the place of their new vehicle while it is off the road. That is a very substantial penalty against the salesman, and the car manufacturer who has supplied the agent in the first place. It seems likely that this will not only have an immense effect on the service side of the industry but can make this most important industry look drastically at the whole problem of quality control.
I believe that this Bill is infinitely more important than the somewhat meagre attendance in the House this afternoon would seem to indicate. I congratulate the Government on yet another substantial step forward in their efforts to protect the consumer.

4.57 p.m.

Mr. George Darling: I think my hon. Friend the Member for Swansea, West (Mr. Alan Williams) was not quite correct about the genesis of this Bill. I raise this matter because I think it tremendously important, not because I was involved in the genesis, but because of the time factor involved in getting legislation like this into operation.
The hon. Member for Beckenham (Mr. Goodhart) said that he wanted to introduce a Private Member's Bill which, as he probably knows, when we were in Government we were ready to back at that time, 10 years ago. In 1965 the then Board of Trade Ministers made it known that they wanted to introduce legislation to carry out the recommendations of the Molony Commission in regard


to what we for convenience call phoney guarantee and warranties. We were persuaded to ask the Law Commissions of Scotland and of England and Wales to look at this matter and to come forward with appropriate amending legislation.
I draw the attention of the House to the time factors that have been involved. As hon. Members may know, the Law Commissions then set up a working party. It was a very good working party, a very large one and a very competent one. It not only came out with recommendations and proposals for law amendments, but also raised a whole series of new questions upon which it wanted comments from people engaged in the various trades which would be concerned with the change in the law. I have with me a document containing provisional proposals relating to amendments to the contracting out of conditions of warranties applied in sections of the Sale of Goods Act. This document is dated 22nd May. 1968. It is worth noting that in this document which was sent to various trade associations for their views, the Law Commissions say:
In view of the urgency of this project it is requested that replies should be forwarded not later than 30th September 1968.
The replies came in and eventually the Law Commissions produced their report, which is the basis of this legislation. The point is that all this started in 1966, it was more or less knocked into shape by 1968, and we get the legislation in 1973.
The right hon. and learned Gentleman quite properly pointed out that this is only one part of what is now developing. He told us that the Law Commissions also have under consideration three other aspects of this legislation—liability in negligence, the application of all this law revision to services, and the difficult question of products liability.
If we are to wait seven or eight years for every reference to the Law Commissions to come forward in terms of legislation, obviously we must alter the procedure. I am sure that hon. Members will agree that we must find a better and speedier procedure for this essential and urgent law revision in consumer protection statutes and regulations.
I hope that in our consideration of the Fair Trading Bill we shall not only accept that the Director-General of Fair Trading can consider such matters as law revision regarding exclusion clauses in contracts within the definition that he will deal with anything that is detrimental to the interests of consumers, whatever the words in the Bill may be, but also that we can lay down the times within which he can deal with these matters. Failing that, we shall have the sort of situation that we are having as a result of referring these matters to the Law Commissions—we hear about the mills of God, but by heaven these grind slowly enough—and it may be impossible to get speedily enough the revision that we want in the interests of consumers.
My hon. Friend the Member for Swansea, West, has rightly said that business interests have been using these phoney guarantees, which I suppose legally we would call exclusion clauses in implied contracts. Whatever kind of public impression they care to give about their good will and how necessary they feel it is to give good service to customers who buy their products, by having this arrangement they have been behaving in a thoroughly despicable fashion. They have been offering their customers what appear to be honest guarantees, in the course of which they have taken away from those customers the common law rights to which they would have been entitled in obtaining redress if something went wrong with the products that they were buying. It is time that this kind of dishonesty came to an end. Therefore, I welcome the Bill.
You are not supposed to know what goes on in Standing Committee, Mr. Deputy Speaker, but during the proceedings on the Fair Trading Bill I have been critical of the Minister for introducing complicated legislation to take the place of what I have described as the clarity and simplicity of the Sale of Goods Act, the Trade Descriptions Act, and so on. I am sorry that in order to redress something that has gone wrong in the provisions of the Sale of Goods Act we must have what appears, to the layman at any rate, to be rather complicated and complex legislation. I will accept the complexities. I will even accept that, as a layman, there are many parts of the Bill that I do not understand, and I will take


the right hon. and learned Gentleman's word for what they are intended to do if the result is, first, that these phoney guarantees will be made illegal in the sense that nobody can rely on them again, and, secondly, that the implied terms in hire-purchase agreements—I do not wish to go into any detail about this matter—are also brought into consideration.
I am glad that one of the difficult problems about a piece of legislation that, frankly, should not be on the statute book —namely, the Trading Stamps Act 1964 —is also to be dealt with. I hope that when we come to a final discussion on the Bill the Minister will be able to tell us to what extent the reference to the Uniform Law on the International Sale of Goods will apply to whatever eventually emerges from this Bill.
I do not think that the Bill should be amended. It ought to go on the statute book and we should see how it works in practice. The time is coming—in fact, it is long overdue—when the whole of the Sale of Goods Act will have to be revised and modernised. Some experience of this revision of part of the Act will help when we finally deal with the Act as a whole.
I welcome the Bill, but I hope that we can take note of the time factor in getting recommendations into legislative form and can find a new procedure which will be far speedier than the production of this Bill.

5.7 p.m.

Mrs. Sally Oppenheim: I was rather diffident about taking part in a debate in which so many right hon. and hon. Members with so much legal experience and expertise were also taking part. However, I am somewhat comforted to see familiar faces on the Opposition Benches from the Standing Committee to which reference has been made. Despite the exchange of compliments which has taken place in that Committee, I am almost alarmed to find myself in such great agreement with the remarks made by the hon. Member for Swansea, West (Mr. Alan Williams).
Modesty almost, but not quite, prevented my mentioning that I feel great satisfaction at being the first hon. Member during this Parliament, early in Nov-

ember 1970, to ask for this very measure. Although the hon. and learned Member for Leicester, North-West (Mr. Greville Janner) followed my good example, I am particularly pleased that this measure is now before the House.
My pleasure is tinged with some regret that the Bill applies only to the sale of goods, not to services. I am aware that this is because the recommendations of the Law Commissions are still awaited regarding the latter. But it is of little comfort to consumers to know why these recommendations have been so long in coming. It is because the representatives of the service industries, particularly cleaning firms, laundries and tour firms, have found that the cost of insuring against not having exclusion clauses would be so great and put up prices so vastly that they would probably price themselves out of the market altogether. I think that this can be of very little comfort to consumers because it is they who are carrying these costs at present.
In making exclusion clauses in warranties and guarantees void, the Bill carries out the recommendation of the 1971 Law Commission that a simple ban on exclusion clauses would not be effective. I am very uneasy, however—and I was glad that my right hon. and learned Friend referred to this point—that even after the passage of this Bill guarantees and warranties can still contain exclusion clauses, which, although they may not be valid, will certainly mislead a great many consumers, most of whom do not know their existing rights under the Sale of Goods Act, let alone how they will be strengthened under this Bill.
I was encouraged that my right hon. and learned Friend said that the Director-General of Fair Trading may look upon this as an unfair trading practice, but in the meantime I would hope that an informative pamphlet would be issued by the office of the Director-General of Fair Trading telling as many people as possible of their new rights under this Bill, in line with his specific duties following the enactment of this Bill.
Indeed, one of the things to commend about this Bill is that it weaves its way so very skilfully in and out of those parts of the Sale of Goods Act which it amends and brings up to date. I should like to welcome particularly the definition of a


consumer sale and the redefinition of a business transaction, because although exclusion clauses are still to be allowed in business sales the fact that they are to be subject to the test of reasonableness will provide an important safeguard for the small shop keeper, the small garage proprietor and the small business man by giving him protection against the large firm which, through its expertise, may seek to take unreasonable or unfair advantage of him by means of exclusion clauses.
The criteria set out in the Bill, which had been amended in another place on Report, now follow very closely the guidelines recommended by the Law Commission. I think that this guidance will be of great assistance to the courts in their interpretation of such cases. Such guidance by statute is greatly welcomed by those of us who have been disturbed by the High Court findings in the case of Beckett v. Cohen, which created such an unfortunate and undesirable precedent. Such guidance by statute may make it possible to avoid this sort of thing in the future, and it is in fact something which we have been considering in connection with the Fair Trading Bill itself.
The definition of merchantable quality —and this is another point which the hon. Member for Swansea, West raised—again follows very faithfully the recommendation of the Law Commission, with the addition of the words "if relevant" after "price", so that the price paid for goods is not always to be taken as an indication of their merchantable quality. I think that answers the question which the hon. Gentleman put. This again is a definition which is of great value to the general public. I wish they could be made more familiar with it in their own interest, and I support the points that have been made that the outstanding problem in consumer affairs today is that most people do not know their rights and, if they did, the odds are that it would not pay them to pursue those rights. This Bill does nothing to help that and so far the Fair Trading Bill does nothing to help it. We shall have to continue our fight to bring about these reforms.
Apart from the actual new measures of consumer protection contained in this Bill, some of its value lies in its new definitions, its redefinitions and its clari-

fication of certain points—for example, its clarification of the fact that a self-service sale in which no words are spoken is in effect a sale by description and that there is an implied condition, as my right hon. and learned Friend said, that goods are of merchantability and that this too, does not always depend on a sale by description.
I know that this was the subject of some controversy in another place because it was felt that this would exclude the rights of people who were not excluded from this definition of a self-service sale at present. It was the old story of the man going into a greengrocer's shop, picking up a melon and handing it to the shop assistant without a word, who would be covered by this definition; but what would happen to the man who went into the greengrocer's shop and asked for a melon and was given a banana? It would appear that he might be excluded by this definition of a self-service sale not being a sale by description. I hope that my hon. Friend will be able to clear this point up.
This is inevitably a very technical Bill and discussion of it becomes dehumanised, but I am sure that a great many hon. Members can take from their own constituency files a number of examples from real life of consumers being cheated of their sale of goods rights by signing guarantees and warranties which seem to them, quite understandably, to be protecting the very rights which are in fact being excluded. It seems to me that quite the most disgraceful and reprehensible aspect of the sort of conduct is that not only has deception been practised but these guarantees and warranties have been presented to people in such a way as to make them believe that their non-signature would be to their disadvantage. To my way of thinking this has been nothing more nor less than fraudulent misrepresentation because it has reduced from six years to 3 months consumers' rights under the Statutes of Limitation to sue for compensation within six years.
I should like to mention particularly the deplorable practice of some motorcar manufacturers and their representatives who, in trying to put pressure on people to sign guarantees and warranties, have threatened to withhold vouchers for


free service if they do not do so—vouchers to which the consumers were already entitled. I am glad to say that this practice is extremely uncommon in the case of British car manufacturers, but unfortunately it is quite common in the case of foreign car manufacturers and their representatives in this country.
I promised to be brief, so I will end by expressing my congratulations to the Law Commission and to those who gave evidence to it, and my warmest congratulations to the Government for their interpretation of its recommendations and their introduction of this Bill. It is a modest and very useful complement to the very important and far-reaching consumer measures that have already been introduced this Session.

5.17 p.m.

Mr. Greville Janner: It is a pleasure to agree with the hon. Lady the Member for Gloucester (Mrs. Sally Oppenheim). I object a little to her introduction about not being fit to debate with lawyers. It is a well-known tactic by a person who immediately demolishes the lawyers' arguments with a combination of charm and subtlety. That is a rather unhappy approach but is not nearly so deplorable as that of my hon. Friend the Member for Swansea, West (Mr. Alan Williams), who finds no dissension in the Chamber so tries to create it within my own family. But that is to be expected, I fear.
I want to refer to two points which the hon. Lady raised. The first is the question of putting up prices. One of the curiosities of dealing with manufacturers in this matter is that they say, "Do not bother to change this because it is very rare for us to rely on it. We are always prepared to go beyond the terms of our warranty, in appropriate cases anyway". On the other approach they say, "Do not change it because it would put prices up". I have found a delightful and wicked document which was put out by the Society of Motor Manufacturers and Traders. It is entitled "Comments of the Society on the Law Commission's Provisional Proposals" and in it the Society says,
Extension of the obligations to cover all financial loss would undoubtedly cause the prices of many goods to rise because of increases in sellers' insurance premiums. It is felt also that the extension should be restricted

to a specified class of persons; the uncertainty of the class of persons proposed by the Law Commission would be likely to encourage purely speculative claims for damages.…
In fact, this makes nonsense of the claim that these people go beyond the terms of the guarantee and warranty. Usually they do not. They do so when they are forced into it, and if they have to put up their insurance premiums, that is one of the misfortunes which we shall all have to accept. Meanwhile, at least people have a better chance of knowing what they are getting. The combination of these two arguments is regrettable.
Secondly, the hon. Lady said that exclusion clauses should not be permitted as such because the fact that they are there will undoubtedly mislead people. I fully accept this. I had hoped that, having regard to our long association in this matter, she might have mentioned the Sale of Goods (Fraudulent or Misleading Guarantees or Warranties) Bill, which modesty would have prevented me from mentioning were it not such an important measure, introduced on 21st January 1971 by the hon. and learned Member for Leicester, North-West by leave of the House under the Ten-Minute Rule and blocked by a shout of "Object" from the Government Benches. That Bill would have made it an offence to include such a clause, and in my view that is still the right way of dealing with it.
Manufacturers should not be permitted to include this clause, and, with respect to the hon. Lady, it is not enough to say that one of the beauties of the Bill is that people will know their rights. Unfortunately, people do not know their rights, and those who need to know the most tend to know the least. The lack of applications for rent rebates despite enormous publicity is the prize example of people not knowing their rights. I do not believe that there will ever be enough publicity to remove the effect of misleading guarantees and warranties, and I hope that in due course the Bill will be amended to make their inclusion improper and not just void.
The latest complaint in my constituency is of a large discount warehouse which includes such a clause. When my constituent complained, the warehouse staff made excuses. The constituent came to me and I raised the matter with the managing director, who immediately said


that there had been a misunderstanding and matters would be put right at once. All constituents should plague their Members of Parliament to intervene with the business houses in this regard until the Bill comes into force. I am glad that the Bill will come into effect one month from the date of Royal Assent.
The Bill will receive support from some surprising sources. I had an enormous flood of mail from all over the country in connection with my previous efforts, among others from the retailers of electrical appliances. They have to deal with the public and tell them that the manufacturers will not do what they want them to do. They bear the brunt of the attack, and are forced into a corner. They in general support this legislation and will be pleased to see it. So will the Association of Mail Order Publishers and many others who are the recipients of the wrath of the general public.

Mrs. Sally Oppenheim: One would have much more sympathy with the retailers of electrical goods if they informed consumers of their rights when they bring in electrical goods for repair. They are entitled to have those goods replaced while they are being repaired.

Mr. Janner: That is a very broad statement of law which I am not sure is correct. That implies that the retailer informs the customer on complicated legal rights. The hon. Lady's suggestion is in cloud cuckooland. No one will say "Sue me if you like if things go wrong". It would not work anyway. The legislation is vital and necessary for the protection of the consumer, but it will at the same time protect many retailers.
The main omission from the Bill is also a matter which I have brought before the House on a previous occasion, namely services. I was given leave to introduce the Exclusion Clauses (Services) Bill, which, again, was blocked from the Government benches. It is a great shame that the excellent measure now before us does not include services.
I will give two brief examples. The way in which car park proprietors are including exclusion clauses in the contracts of those who park on their premises is a national scandal. They are making vast fortunes out of people who have no alternative but to use the off-

street parking they provide. It is not, as the hon. Lady suggests, a question of signing a guarantee, nothing as firm as that, simply a statement on the ticket. Customers often have to leave their ignition keys. If someone in the employment of the proprietor crashes the car against a pillar the company accepts no liability and blithely says, "Claim against your insurance". That, for good drivers who have had reasonably good fortune, means the loss of their no-claims bonus. The sooner these disgraceful car park practices are dealt with the better.
Secondly, I refer to the exclusion clauses used by local authorities when replying to purchasers' solicitors in conveyancing matters. I thank the Law Society for drawing this matter to my attention. When I asked some time ago whether the Secretary of State intended to issue a circular to local authorities advising them of the undesirability of adding exclusion clauses to their replies to additional inquiries or other questions raised by solicitors acting on behalf of proposed purchasers of property within their areas, I received the following reply,
A circular giving advice on this subject would be premature while the local authority associations are discussing the matter with the Law Society and while it is also being considered by the Law Commission which will be reporting to my noble and learned Friend the Lord Chancellor in due course."—[OFFICIAL REPORT, 18th February 1972; Vol. 831, c.173.]
Will the Minister be good enough to tell the House the result of these discussions and what is to be done about the unfortunate exclusion clauses used by local authorities?
The cry that has come from both sides of the House regarding small claims is a fair one. It has been said that it is a law which is available for the rich. It is also available for the poor. A person with a good case and no money can get legal aid. A person with a good case and plenty of money does not need legal aid. The vast majority of people who buy modest cars or modest electrical appliances cannot afford to take a case to court. They cannot even afford to win, and they certainly cannot afford to lose. It is about time that this was dealt with, and I regret that the Bill contains no provision to this effect.
This law will soon be in full force. What should buyers do in the meantime? They must look out for themselves and


remember that the Bill is not retrospective in its effect. It would be a mistake to believe that there is any protection against these scandalous, spurious and thoroughly fraudulent so-called guarantees and warranties until the Bill is brought into effect. Until then, members of the public should refuse to accept the guarantees, and especially they should refuse to buy a car from a dealer who insists on their signing a form. There are plenty of dealers who will not insist. Buyers should take their business to them. Secondly, they should know their rights even after the Bill has come into effect. They should realise that these clauses now mean something and later will mean nothing, that it is not illegal today to include them and that it will not become illegal in the future to include them. Thirdly, they should use their Member of Parliament when they believe that their rights are being taken away from them. It is part of our job to help consumers who are being cheated.
Finally, what should sellers do? The answer is clear. All those who have seen fit to impose upon unsuspecting buyers these shocking documents called guarantees or warranties, which guarantee only trouble and warrant only legal problems, should withdraw them now. They should take them away from their contracts and cease to deceive the public before being forced to do so. They should not wait until the Bill becomes law and then for further action to be taken under the Fair Trading Act. They should stop deceiving the public now.
I call upon the Motor Agents Association to remove Clause 3B from their contracts without further delay. It should not have been there in the first place and it is disgraceful that it is there now. There is no excuse whatever for any further delay in removing it.
I hope that the Bill will be passed very soon and I trust that my deceased Exclusion Clauses (Services) Bill will also be taken over by the Government in due course, as they have taken over my previous Bill, but that next time they will give due acknowledgment.

5.30 p.m.

Mr. Edward Lyons: I acknowledge all the work which has been done in these matters by my hon.

and learned Friend the Member for Leicester, North-West (Mr. Greville Janner) but I shall not follow him in his emotional style on the topic, although he has every reason to feel emotional about a subject on which he has laboured for so long and with some success. He claims that the Bill is his, and the Law Commissioners could also be forgiven for making a similar claim. The Bill justifies the existence of the Law Commission. I do not know how we ever managed without it. The Sale of Goods Act has lasted since 1893 and no solution to the problem was discovered until the Law Commissioners became seized of the topic a few years ago, with the result that we are now to have a guarantee system which is checked and hindered. In the past it has acted as an oppression against the consumer.
The fact that the Government have brought the Bill forward shows that we no longer believe in this country in the concept that both sides enter into a contract on equal terms. With the existence of the big corporations the consumer has to take an agreement or leave it. If someone rents a flat he gets a standard copy of a lease. Twenty years ago his solicitor would have altered it, it would have gone back and would have been altered again and the solicitors would send the lease back and forth amending and changing it. That does not happen today. The tenant takes the standard terms or leaves them. The same applies to motor cars and many other services and commodities.
In that relatively new and contemporary situation the individual has no chance against the company, against the man who can afford the best legal advice. Therefore the State has felt obliged to take the view that, although it has hitherto believed in the freedom of contract, it now recognises that it must redress the balance in favour of the individual and of the consumer. That is the purport and effect of the Bill.
It always seemed to me that the sending in of guarantee forms served two major purposes. First, it limited the company's, the vendor's liability. Secondly, it gave the vendor company useful information about how its sales were going in the country. If it received 10,000 guarantee cards back in a month,


it knew that it had sold, say, 10,000 cars and it knew exactly when and where it had sold them. The system acted as a useful form of market research for the company.
The sad fact was, however, that the consumer in the end believed that the only liability lay not with the person who had sold him the car, the electrical apparatus or whatever; he believed that his only remedy lay with the manufacturer. The system diverted him from realising that the person with whom he had done the deal was the retailer or the garage proprietor and not the manufacturer.
The effect of the Bill is to preserve and assert the right of the purchaser to go to the vendor direct and not to be diverted by a belief that he can go only to the manufacturer. Certainly guarantees often remove the consumer's right to seek redress from the vendor. I hope that in future the consumer will realise that his right to deal with the garage proprietor, for example, remains intact. The guarantee system will continue to exist. All this means that the proprietor will have to look to his own lines of communication with his suppliers. That applies not only to garage proprietors but to vendors of all kinds of equipment. If he is to receive the writ he will want to ensure that the property in question was in good condition. It is to be hoped that this will have some effect in ensuring that products turned out from both British and foreign factories will reach the consumer in better shape than has hitherto been the case.
Reference has been made to the fact that there is as yet no Bill relating to exclusion clauses for services. I believe that we should await the report of the Law Commission on that point. If the Commission can solve the problem tackled in this Bill it can solve the problem of exclusion clauses. I hope that when it is dealing with that problem it will be able to deal with the practice of the Post Office which excludes responsibility for its negligence. If it omits a subscriber's name from the telephone book at the moment, the subscriber cannot sue for the damage caused by the omission. The point was raised in the other place by the noble Lord, Lord Janner. It is to be hoped that the law will be altered so that the Post Office will

be responsible for its own negligence as well as for any services that it provides.
We are looking forward to further changes in the law and we hope that the effect of those changes will be to protect the consumer. There are those who believe that the consumer should not be molly-coddled and such people regard any step taken to protect the consumer as molly-coddling. We must recognise today, however, that the individual has no chance against the corporation and the Bill is a major step forward in protecting him in the future.

5.37 p.m.

Mr. Arthur Davidson: First, I wish to apologise to the Under-Secretary because I shall be unable to be in the House to hear the whole of his speech. I have explained the reason to him and I think that he understands. It will be my loss because I always enjoy listening to him. He has a nice, gentle, mellow tone.
Whether or not my hon. and learned Friend the Member for Leicester, North-West (Mr. Greville Janner) considers that sufficient praise has been given to him by the Government for his efforts, I certainly intend to praise him for what he has done. He has been extremely active since he came to the House in drawing attention to the evils of exclusion clauses. As for the difference in merit between him and his distinguished father, I do not intend to commit myself except to say that I would veer slightly towards my hon. and learned Friend. Perhaps he will be kind enough not to convey that sentiment to the noble Lord, Lord Janner.
All who have spoken so far have said how much they welcome the Bill. Of course, I welcome it, too, but before we all collapse in an orgy of self-congratulation we should perhaps put the matter into perspective. It is a good little Bill, but it is hardly a Bill to carry out a fantastic and revolutionary measure. It amends the 1893 Act and it has therefore taken us about 80 years to get round to doing something about it. I do not blame the Under-Secretary for that, however, The Court of Appeal has endeavoured to bend the law—although it would call it amending the law in its own way—to try to assist the consumer and protect him from the worst effects of the contracting-out provisions of the Sale of Goods Act.


Parliament has therefore known for a long time that the Act has not been working properly. In 1963 the Molony Committee reported; in 1966 the Law Commission was set up to examine the matter in detail; the Consumer Association has been pressing for something to be done since 1957; and here we are in 1973 praising ourselves for having eventually done something about it. It must seem a little odd to the public. None the less, something has been done and I only hope that in 2063 we shall not witness Parliament eventually getting round to amending the Bill now before us.
The delay is also a remarkable comment on the extraordinary way in which we conduct day-to-day dealings. Year in and year out traders and manufacturers have been allowed to get away with the disgraceful and discreditable practice of deliberately drawing up their agreements in terms that the consumer cannot possibly understand and cannot be expected to understand. They have thereby calculatedly set out to deprive consumers of rights that many did not even know they had.
If that is called equality of bargaining, it is a very strange description. Equality of bargaining is a fiction. When dealers use elaborate and jazzy terms to advertise their goods, and so many pressures are put on the consumer to buy at all costs, under any circumstances, whether he can afford it or not, it is hardly surprising that he has suffered injustice after injustice over the years. The Bill will in some way redress the balance, and I welcome that.
We have been praising the Law Commission for finding a solution. The Bill amends Section 55 of the 1893 Act. It does more than that, but that is what the House is mostly concerned with. I pay tribute to the Law Commission for its work, and wish that it could be brought a little closer to the work that Parliament does. But all that it has done is to say that exclusion clauses which are permitted by Section 55 shall no longer be allowed. That was recommended after two years' work by some of our eminent legal brains. Members of the public will regard it as a little strange that so much time should be devoted to coming up with what will seem to most of them as an obvious solution.
There have been repeated references to the need to introduce similar legislation to outlaw exclusion clauses in con- tracts for services. An abuse drawn to my attention recently concerns offences under the Unsolicited Goods and Services Act, with which the hon. Member for Beckenham (Mr. Goodhart) and I are particularly familiar. He and I had something to do with putting it on the statute book. Under that Act it is an offence to send out demands for payment for goods or directory entries which the sender knows to be unsolicited. Unscrupulous trade directory firms are now sending out demands for payment for unsolicited entries in trade directories. But at the bottom of the demand, in very small writing, they state, "This is not a demand for payment". The courts may well construe that as meaning that the document is not a demand for payment, but any member of the public receiving such an invoice will think that it is.
Those words are a fraudulent and dishonest way of getting round the Act. I shall send the details to the Under-Secretary and his Department, and I hope that they will examine the matter very closely. The matter shows the vigilance that must be exercised by everyone concerned with consumer affairs even after the Bill becomes law. Many firms, whether manufacturers or retailers, will try with the means at their disposal, no doubt with the connivance of lawyers, to find a way round the legislation.
I do not want to go into the legal technicalities of the Bill. What the public wants to know is what it will do for them. I hope that it will mean that in future the seller of goods will be responsible for things that go wrong with articles he has sold—in other words, that the public will have redress for shoddy goods and goods that break down, and that no clever words in small print will do the consumer out of his rights.
I agree with my hon. Friend the Member for Swansea, West (Mr. Alan Williams) that there is already a great deal of confusion in people's minds about what their rights are, and even more confusion about how they can enforce them. The public are already protected. Most of the so-called guarantee forms have no validity, because the rights of the buyer are governed by the contract he signed with


the retailer, if indeed he signs any contract at all. Most guarantees are totally irrelevant, but the consumer does not know that. He is led to think that the guarantee is the binding contract. In that sense the large, so-called respectable manufacturers who force gullible people—and that means many people—to rely on contracts of guarantee are behaving disgracefully.
I should have liked to see the contracting-out clause applied to every contract, not only to consumer contracts but to contracts between dealer and dealer or between retailer and manufacturer. I have not been convinced that that would not he feasible by any of the arguments I have read, with great respect to the distinguished members of the other House, many of them the leading legal minds in the country, including the Master of the Rolls, the Lord Chancellor and a former Lord Chancellor. However, we have come up with a typical British compromise.
As I understand it, in contracts of a non-consumer nature it will now be possible for people to strike their own bargain, but if the court takes the view that it would he unreasonable to uphold the bargain, if it can be called a bargain, it can interfere. I can see a great deal of litigation resulting from that, and a great deal of court time being occupied. That underlines the need for a separate consumer court where the small consumer can pursue his small claim. If the county court is to be further cluttered up with disputes about what is or is not reasonable and about the interpretation of the six criteria, the inclusion of which I welcome, the waiting time at the courts will be longer than ever. It is no use giving consumer rights if they cannot enforce them.
I was very sorry to note that the former Solicitor-General, the present Minister for Trade and Consumer Affairs, speaking over the weekend, said that he has had second thoughts about the feasibility of a consumers' special small claims court. I remember once having the great pleasure of debating with him at the Cambridge Union. He was an impossible person to debate with because when one said such-and-such was the thing to do he would say, "That is exactly right, that is

what I intend to do"—with the collapse of the opposing party.
One thing I was hoping he would do, because he was a Solicitor-General for whom I had great respect, was to institute some method by which the ordinary consumer could pursue his rights, with minimum cost, without the use of lawyers and all the procedural devices in courts. Since most of the transactions which will be covered by this Bill will be very small ones involving such things as electric irons costing £6 or £7, it will not be worth a consumer's while to pursue his claim in the county court. Therefore, a small claims court is an essential corollary to this Bill.
Finally, I wish to take a point which the right hon. and learned Gentleman rightly made, that some of the retailers or manufacturers in service industries had said that one of the reasons they cannot get rid of exclusion clauses is the cost. This argument is always put forward when one tries to get new legislation of this kind, as my hon. Friend and I saw quite clearly during the passage of the Unsolicited Goods Act. Whenever one tries to get a measure of consumer protection on the statute book those retailers or manufacturers who are intimately concerned say, "Of course we agree with you that it would be very desirable that this should be on the statute book and it is monstrous that consumers should be treated in this way, but do you realise that if this is done our prices will have to go up? That is the only reason why we are not actively supporting you in this campaign".
That will not wash. Manufacturers and retailers say the same thing about unit pricing and date stamping. That was one of the reasons a retailer gave for saying it would not be feasible to date stamp. They must change their minds and realise that the consumer today has a very powerful voice. One of the reasons why he has a powerful voice is that the newspapers and other media have been very active in recent years in protecting the consumer. One cannot open a newspaper today without finding some consumer watchdog column. The Sunday Times, the Daily Mirror and the Sun all have such columns, and they all do a very good job of work. They will continue to be needed.
We must not be complacent about this Bill and its effects. It is a useful little measure. I welcome it and I am glad that it is to be placed on the Statute Book, but it is only a very small, modest measure. Much more needs to be done. We must get as soon as possible similar legislation in respect of services, because that is where most of the abuses occur today. With those very minor strictures I, like everybody else, welcome what is essentially an all-party measure.

5.52 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): This has been a very interesting though happily short debate on what is nevertheless an extremely important subject. I certainly welcome the many voices of approval and the almost unanimous welcome of the Bill that we have heard. There have been contributions from my hon. Friends and hon. Members opposite, all of whom have some degree of expertise, either as legislators or would-be legislators in this field, and all the contributions have been extremely helpful. The debate has helped me by enabling me to tiptoe delicately for the first time into consumer matters after having so often been on the other side in these debates. I will do my best to answer the various points that have been raised, so far as they do not raise matters of fine legal nicety. Those we shall have to look at and deal with later.
Perhaps I can begin by reiterating the basic principles on which this Bill is based. As my right hon. and learned Friend said in his opening speech, we are seeking to redress the imbalance in bargaining powers which, under the 80-yearold Sale of Goods Act, has undoubtedly swung heavily against the consumer. We have, therefore, accepted the view of the Molony Committee on Consumer Protection and the Law Commissioners that the conditions and warranties implied in Sections 12 to 15 of the Sale of Goods Act represent a code of fair dealing for the consumer which he has a right to expect to be honoured whenever he buys goods.
We recognise, of course, that, as many hon. Members have said, many problems arise in the purchase of services from exclusion of liability for negligence and from the general difficulties of the law relating to products liability. But as my

right hon. and learned Friend said, the rights of purchasers of services are being considered by the Law Commissioners together with the other related problems in this very complex field of law and are to be dealt with in further reports in due course.
The right hon. Member for Sheffield, Hillsborough (Mr. Darling) and the lion. Member for Accrington (Mr. Davidson) criticised at very great length the time taken to bring this measure to the statute book. I believe they echoed fears that it would take a long time to deal with these other points. I do not entirely share their view on the analogy of 80 years because I do not believe that the pressure in this respect has developed over a period of 80 years. I think it has occurred as a result of the changed economic circumstances in much more recent times. But I emphasise that this is not such a simple matter as the hon. Member for Accrington sought to make out. Perhaps merely in the consumer field it is, but it relates also to business transactions between persons in business just as much as to consumers and these are much more controversial and rather more complex. I will speak later on these matters as touched upon by the hon. Member for Accrington.
There is, of course, an obligation upon the Commissioners to consult very wide-ranging interests in this respect. Looking at their report, one sees a very long list of organisations and interested parties who have to be consulted. Indeed, the hon. Member for Swansea, West (Mr. Alan Williams) urged the Government to talk to the National Chamber of Trade on a particular problem to which I shall refer later. I must emphasise that the Law Commissioners do not have to do just a little drafting with a scratchy pen. They have a formidable task. But they will have taken a note of the points made in this debate and, being men of great distinction to whom we are very grateful for the work they do, they will, I am sure, proceed as expeditiously as possible. Certainly, I can tell the House that when their reports become available the House need be in no doubt that the fullest and most sympathetic consideration will be given to any further proposals made for the protection of the consumer.
It seems to be unanimously agreed that consumers should have an inaleniable


right to the implied terms in the 1893 Act. There has been no general opposition to the proposals made by the Molony Committee and subsequently by the Law Commissioners that these rights should he brought up to date to take account of the vast changes which have taken place in commercial and consumer dealings since the 1890s; and therefore the central core of the Bill can be said to be based on a genuine consensus in the House and outside.
This also applies to the subsidiary objective of the Bill, which is to align the positions about implied terms in different kinds of transactions so that the same protection is given no matter whether the transaction is a cash sale, an instalment credit sale, or a hire purchase or conditional sale. This equality of treatment is, in our opinion, an essential simplification for the consumer. In future he will have only to weigh up the balance of advantage as between paying cash or buying on credit, knowing that the conditions applying to both kinds of transaction will be the same.
The third intention in preparing the Bill was that in business sales the weak should be protected while the strong should be allowed to contract together as they will. This has proved to be the area in which the range of view has been widest and in which, as a consequence, the Government have been faced with the most difficult decisions. The hon. Member for Accrington touched on this.
The Law Commissioners found the world of commerce very much divided on the question whether there should be any control on exclusion clauses in business sales. They also found those who consider such control to be essential by no means agreed on the extent of control necessary. In the event, the Law Commissioners concluded that some protection was necessary in this area. They were almost equally divided on how this should be achieved. They did, however, agree unanimously that the ban on exclusion clauses which they considered necessary in the case of sales to consumers should not also be extended to business sales. In this respect the Law Commissioners were unanimous in disagreeing with the hon. Member for Accrington. Only after further consultation with interested parties and careful

consideration of the possible solutions to this problem was it decided to allow exclusion clauses for business sales, subject to the test of reasonableness.
We believe that this course holds a fair balance between freedom of contract and ensuring that sellers in a strong bargaining position cannot impose onerous conditions on weaker buyers. There are those who have argued that freedom of contract is the fundamental principle of our commercial law, and that to interfere with it by regulating the use of exclusion clauses will import uncertainty into the law and leave manufacturers uncertain as to the extent of their liabilities.
There is some weight in this argument, but in the memorandum submitted to the working party by the Law Commissioners it was disclosed that only in a small number of business sales had unfairness or injustice resulted from exclusion clauses. The House will appreciate that we are not dealing with the situation as it was when the Law Commissioners took evidence or as it is now; we are providing for the situation as it will be when exclusion clauses are no longer permitted in consumer sales.
In these circumstances the consumer will look to his supplier—who will generally be the retailer—for redress if the goods he receives are defective. It would be inequitable to leave the retailer alone to bear the entire burden of these changes. He must be allowed to pass this liability back along the chain of supply to the manufacturer, if that is where it belongs.
The Law Commissioners, who took the view that the control of exemption clauses should be extended to the business sales side, said:
It would be morally and socially unjustifiable to reform the law at the expense of a single section of the trading community.
We entirely accept this view, and this has led us to accept a further recommendation of the Commissioners, which is that those in the business community whose bargaining power is outweighed by their suppliers should be protected by exclusion clauses. The Bill empowers the courts to apply the test of reasonableness to determine whether, in all the circumstances of the case, it would be fair to allow a seller to rely on an exclusion


term. I have dealt with this with some care because it has been the subject of great controversy outside.
In this debate, however, most speeches have concerned consumer sales, on which subject there has been little disagreement. I will try to deal with all the points raised in the debate and if I fail to do so I will follow them up later. The hon. Member for Swansea, West asked whether cut prices could be used as a reason to deny the rights provided by the Bill in the case of retail goods. The answer is that traders cannot exclude on grounds of cut price or in consideration of a reduced price in a consumer sale. That will not wash. It cannot be used as a device to exclude. However, the cheaper price may be a relevant factor to be taken into consideration when considering merchantable quality.
The other point which the hon. Member raised concerned the case of Beckett v. Cohen. This concerned a certain interpretation of the Trade Descriptions Act by the Divisional Court. An article in the magazine Which? said that the effect of this decision was not as wide as was feared. I have looked into the tourist aspect of this matter. Only a few package tours or hotel bookings are really affected by this decision, as we understand it. That view was also taken by Which?. We will certainly keep this under regular review.

Mr. Greville Janner: Is it not right that this decision has left the law on trade descriptions in this area in grave doubt, so that the number of prosecutions has been considerably reduced? Is it not correct that the court made it clear that the Trade Descriptions Act was not concerned with warranties as such but with false trade descriptions, so that it was not possible to impose a criminal liability upon people because they do not come up to the terms of their contract? This Bill is all the more important because of that.

Mr. Grant: We should be in difficult waters if we sought to debate the details of the case. The point that I am making, broadly speaking, is that as I understand it, the decision of the court was that a person could not be caught under the Trade Descriptions Act for representations about a future event. On the other hand,

certainly for tourist cases, the vast majority of representations do not come within that category.

Mr. Edward Lyons: Perhaps I may assist the Under-Secretary. The position appears to be that if a holiday company says, "This hotel has a night club", it is a representation of existing fact. The decision of the court does not affect such representation, and a person making a false representation of that kind would be liable. If an hotel which had not yet been built was being advertised and the brochure said, "This hotel will have a night club", the court's decision would appear to prevent the company which published that brochure from being prosecuted. In other words, if the hotel were not yet built, a person would be protected by the decision. If if were built he could be prosecuted.

Mr. Grant: In a nutshell, that is precisely the point that I was seeking to make.

Mr. Alan Williams: I am sorry that the hon. Gentleman is having to face a barrage of interjections. I refer him to a letter I received from the Minister for Trade and Consumer Affairs dated 2nd January 1973, in which, speaking of this decision in the High Court, he says:
… it has served to underline the fact that the section in question does not cover statements which are merely promises for the future … In the nature of things, a holiday brochure is largely concerned with what will be provided in the future".
Our concern is that a large number of people will be gravely misled and disappointed, and will have no possible recourse under the Trade Descriptions Act as a result of the interpretation now being placed upon that Act.

Mr. Grant: Be that as it may—and I know the hon. Member for Swansea, West will have listened carefully to what has been said in the debate—this will not affect their remedies as a matter of contract. We do not want to delude ourselves that they are entirely without remedy if they find themselves in this situation. We will look at this question very carefully, but some of the fears, as, indeed, the Consumer Association pointed out, will have been slightly exaggerated.
I will next take up the points raised by the hon. Member for Gloucester (Mrs.


Sally Oppenheim), who takes a very close interest in all these matters. She asked why exclusion clauses were not explicitly banned from consumer sales instead of allowing them to be included in contracts and making them void. The answer, I believe, is that in many sales standard forms of contract are used and in a number of cases this is convenient to both buyer and seller. The seller does not necessarily know in every case whether the sale is to a consumer or in the course of business. If a ban were imposed, he would break the law. A consumer might break the law unwittingly if he signed a standard form of contract with an exclusion clause. The same contract with a business buyer might be lost. Making such clauses void gives protection to the consumer and others entitled to it whilst avoiding this difficulty.
The right hon. Member for Hillsborough, as did the hon. Member for Gloucester, questioned whether the Bill would invalidate phoney guarantees, about which we have heard a great deal. The answer is that consumers will be fully protected against phoney guarantees. Their rights cannot be excluded by guarantees, or in any other way.
I agree that there is a problem in making consumers aware of their rights and I share entirely the sentiments expressed on both sides of the House and, in particular, by the hon. Member for Gloucester, as to the need for publicity to make these rights known to the consumer. We will use every available means to do this and we will look very carefully at the suggestion made by the hon. Member for Swansea, West, of securing the widest degree of publicity for the changes which have taken place in the law.
I pass now briefly to the other important points made by the hon. Member for Swansea, West concerning the National Chamber of Trade. We must recognise that this is a matter of concern to shopkeepers great and small, and retailers in particular. I know it has been suggested that if retailers are to be expected to accept liability in every consumer sale for the conditions and warranties implied in the Sale of Goods Act they ought to have the right to pass that liability on to the wholesalers or manufacturers, if that is where it belongs. Those who hold this view believe that it is necessary to extend the ban on

exclusion clauses to all sales and not to confine it to consumer sales. That, I believe, was the point of the hon. Member for Accrington. But, as I have said, all these points were considered very carefully first by the Law Commissioners and then by the Government before this very difficult and far-reaching decision was taken. Nothing that I have heard today or at any other time has led me to shift the balance of argument in favour of a complete ban on exclusion clauses in business sales. All the points made have already been considered.
Indeed, it was those very arguments that led one half of the commissioners to say that they accepted the representations made on behalf of the retailers that they need a safeguard of legal protection. These same commissioners recommend the test of reasonableness as the most suitable safeguard. The other commissioners—and they were divided on this—thought that the arguments carried little weight and would have left the present business sales situation unchanged. However, they also accepted that if there was to be general control of exclusion clauses in business sales, they should take the form of a reasonableness test. We have therefore accepted and incorporated in the Bill the conclusion favourable to the retailers' case.
Having said that, I answer the hon. Member for Swansea, West, by saying that my noble Friend the Under-Secretary of State for Trade and Industry has only recently written to the National Chamber of Trade offering a meeting with officials. The National Chamber of Trade will no doubt respond to this letter in due course.

Mr. Alan Williams: I am grateful to the hon. Member for that answer. As I received correspondence from the National Chamber of Trade only this weekend, I am rather surprised to find that the hon. Member has so quickly agreed.

Mr. Grant: I am sure that advantage will be taken of that offer.
The last point raised generally by hon. Members on both sides of the House, and in particular by the hon. Member for Beckenham (Mr. Goodhart) and the hon. Member for Swansea, West, concerns the question of small claims courts. I would prefer that the Minister for Trade and Consumer Affairs were concluding


the debate on this point because his comment and decision have to some extent been criticised. However, I am able to say that my right hon. Friend is not in any way dogmatic or doctrinaire on the matter of small claim courts. The purpose which hon. Members have advanced in the debate for such a court is one with which my right hon. Friend and I very much agree. The only difference between us concerns the method by which it should be implemented. It will certainly he salutary in promoting generally higher standards for manufacturers to be aware that consumers are able to seek effective redress. It is equally essential that when consumers are forced to seek redress they should have confidence in the machinery of justice. The aims must be to make this readily intelligible, generally accessible and effective.
I recognise that the earlier system, with which at one time I was not wholly unconnected, was not generally regarded as meeting these requirements, and it was thought that there was a clear need to change the system. The important changes made last year in county court procedure were designed to achieve that end. The extent and value of these changes to consumers has not yet been fully appreciated. I very much hope they will be more fully exploited than they have so far been.

Mr. Arthur Davidson: I agree with the Under-Secretary that the changes in procedures in the county court have helped a great deal, and that judges and county court registrars lean over backwards to help the consumer in many ways. One of the reasons why consumers do not wish to pursue their rights is that they are frightened to go through the formalities of a proper court hearing. They would be much more active in pursuing their rights if they could go somewhere much more informal, where there might not be the wigs, robes and other similar things which tend to frighten ordinary people. Would the Minister bear that in mind?

Mr. Grant: It may be that at the end of the day we should have to consider something of that nature.
The view of my right hon. Friend is, I believe, that at this stage we should

proceed within the existing system by making it simpler and more accessible to the small claimant.
I repeat the point I was making: the changes that have taken place in county court procedure are not generally known. Enormous changes have taken place since the time when I had anything to do with them, and claims can now be brought by default summons. This allows for judgment without the necessity for any hearing. The registrar may now conduct a free trial review. This provides an informal hearing in the registrar's private room—with no wigs, I understand—to ascertain the real issues of the case. If the review shows there is no real dispute, or that the dispute is only as to the amount owing, the registrar will be able to give final judgment there and then. In my experience nobody has been terrified or intimidated by a registrar in our county court—at least, not in the modern ones.
If the consumer issues a claim of £20 or less—which I suppose is the case in the majority of consumer claims—he cannot be made liable to pay the solicitor's costs of the other side, and steps are being taken to simplify county court forms. My noble and learned Friend the Lord Chancellor is also proposing to conduct an experimental scheme in conjunction with citizen's advice bureaux, whereby in selected bureaux retired county court officers will be able to advise dissatisfied consumers who want to pursue a claim in court on the filling-in of forms and the presentation of evidence.
There have been great strides, and I feel that those of us who come into contact with them, either professionally or through our activity as Members, could go a long way towards bringing these matters to the attention of consumers who, as I know from examples in my constituency, will find that the worst horrors of the county courts do not exist, and are past history, if not a figment of their imagination.
I think that I have covered most of the points raised in the debate. If there are any which I have omitted I shall be glad to follow them up in writing or at the Committee stage—which I was glad to be told by the right hon. Member for Hillsborough would be short, in view of the 80-year delay it has taken to bring in this legislation.
I agree with the hon. Member I or Accrington that none of us would wish to make too many claims for the Bill, but, as my right hon. and learned Friend said, we regard it as an important step along the road to providing the consumer with reasonable protection, and it should be seen as part of the developing policy which will give the consumer more rights and make it clear to him what those rights are. In this process his bargaining power will be increased and the imbalance which has been increasingly evident in recent years will be redressed.
This process will also benefit manufacturers and dealers, because they will all be forced to look more closely at the quality of goods they supply, and if, as I firmly believe, the general standard of goods produced and imported is raised, it will be to the advantage not only of consumers but of British industry and commerce as a whole.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — CRIMINAL APPEAL RULES (EUROPEAN COURT)

6.24 p.m.

Mr. Ronald King Murray: I beg to move,
That this House takes note of the Criminal Appeal (References to the European Court) Rules 1972 (S.I., 1972, No. 1786), dated 21st November 1972, a copy of which was laid before this House on 1st December.
It might be for the convenience of the House, Mr. Speaker, to consider at the same time the following two motions on the Order Paper, also standing in my name and the names of my right hon. and hon. Friends:
That this House takes note of the Crown Court (References to the European Court) Rules 1972 (S.I., 1972, No. 1787), dated 21st November 1972, a copy of which was laid before this House on 1st December.
and
That an humble Address be presented to Her Majesty, praying that the Rules of the Supreme Court (Amendment No. 3) 1972 (S.I., 1972, No. 1898), dated 27th November 1972, a copy of which was laid before this House on 8th December, be annulled.

Mr. Speaker: I assume that that is the wish of the House.

Mr. Murray: It would have been my wish to have taken with these three motions the corresponding order for Northern Ireland, which is 1972 No. 5, and the corresponding Acts of Sederunt for Scotland, because it appears to me that they do for Northern Ireland and Scotland what these instruments do for England and Wales.
With one exception—the general amendment part of the Supreme Court of Judicature Order No. 1898, dealing with the rules of the Supreme Court, which have nothing to do with the Community—these orders can be summarised as providing and creating the structure for dealing with references from the courts of this country to the European Court, on the one hand, and, on the other, for dealing with and giving effect to enforceable Community judgments in this country.
I should, perhaps, express disquiet at the fact that there does not seem to be any effective parliamentary way in which one can bring these three aspects of the law together under one heading, as it were, because it seems to me that the Scottish Acts of Sederunt are not subject to any parliamentary procedure, and it may be that the same applies to Northern Ireland at the present time. I should be interested to learn what procedure is available for them.

The Attorney-General (Sir Peter Rawlinson): The Northern Ireland orders are laid before Parliament. The hon. and learned Gentleman is right about the Acts of Sederunt in Scotland. It is different there.

Mr. Murray: At any rate, there seems to be no satisfactory way in which we can bring together the courts of the three parts of the United Kingdom which comprise the courts of the country in order to get an overall picture. I do not know whether there is a parliamentary avenue by which this can be done, but I have not found it.
It seems unsatisfactory that as we enter the EEC there is not some mechanism for doing this, because it is important to make assessments and forward projections of the kind of effects that orders of this kind will have upon the people of this country


as a whole and not just simply the people of England and Wales on the one hand, or Scotland on the other, or, again, the people of Northern Ireland, so that we could achieve a balanced picture for the United Kingdom as a whole.
The argument in support of that is powerful, because in making forward projections of that kind there is no real reason to suppose that the picture in Scotland or Northern Ireland will be very different from what it will be in England and Wales. In the light of this argument I press the Government to tell us what forward projections they have made as to the effects of these orders and, of course, the effects of the Community arrangements under which they are to operate upon litigants in this country.
What investigations have the Government made, for example, of the probable additional workload on the European Court itself? Can we have some indication of the sort of delay that we are to expect from references to that court? These are matters upon which there is a certain amount of material to draw, because the original six members of the Community must have had similar difficulties at the time of their accession, when, for the first time their courts became subject to the overriding jurisdiction of the European Court.
So this is not a matter on which we tread a path which has not been trodden before. It must be possible to make some assessment, however approximate, of the kind of workload which will fall upon the European Court as a result of the accession of this country, the Republic of Ireland and Denmark, although it is obvious that the assessment for this country is what is material to our people.
What estimates have the Government made of the probable number of references from this country to the European Court? That, of course, will consist again of looking at previous European experience and also of looking at existing litigation in this country to see, having regard to the European Communities Act 1972, to what extent existing cases are already raising problems which would imply a reference to the European Court unless agreement is reached by the parties concerned about the interpretation of some particular piece of Common Market law.
There must already be some information—whether it is available to the House I do not know, but I would like to know—by which the people of this country can be guided as to the impact of these orders upon their lives. What estimate have the Government made of the likely average delay resulting to litigants from references to the European Court? That is a matter of particular concern, because the law is not notorious for the speed with which it operates in every case. It is very speedy in some cases, but there are cases in which its delays are somewhat notorious, and it would be a very unsatisfactory state if, for example, a simple industrial accident case were to be delayed for years because of a reference to the European Court.
I hope that the kind of doubt that I have expressed can be resolved by the learned Attorney-General, but it seems to me that the public are entitled to know, first, what forward thinking the Government have done in this respect and, secondly, the probable impact of these rules.

6.30 p.m.

The Attorney-General (Sir Peter Rawlinson): As the hon. and learned Member for Edinburgh, Leith (Mr. Ronald King Murray) said, we are considering three sets of rules. The corresponding Northern Ireland Statutory Instrument has been laid but it is not being considered today, and I understand that the Acts of Sederunt do not have to be laid before the House. All that I can do is to assist the House on the matters before it.
The principal Statutory Instrument of the three before the House is that dealing with the rules of the Supreme Court. As the hon. and learned Gentleman said, all these Statutory Instruments lay down rules of procedure to give effect to references to the European Court from United Kingdom superior courts and to provide for the enforcement of Community judgments in accordance with the order approved by Parliament in November.
I shall answer the questions posed by the hon. and learned Gentleman. Two separate matters are dealt with here. There is, first, the enforcement of judgments, which is dealt with in Rule 8 on page 3 of Statutory Instrument No. 1898, and, secondly, references to the European


Court, which is dealt with on page 7. That provides a model of procedural machinery which is followed in the other two sets of rules, namely, the Criminal Appeal rules and the Crown Court rules.
The Supreme Court Statutory Instrument—the principal one—also deals with certain matters with which the House is not so concerned—certainly the hon. and learned Gentleman is not—namely, amendments to various rules relating to proceedings for taxation, wardship, claims for exemplary damages, and so on. They are all recited, and I shall deal with them if the House wishes, but I do not believe that that is the purpose of this debate.
What we are concerned with here is, first, the powers on page 3 of the Supreme Court rules relating to the amendment of Order 71. It is necessary to provide for the procedure relating to the enforcement of Community judgments. Provisions of the three Community Treaties give a direct right of enforcement. These rules that we are debating provide the necessary machinery for enforcing such judgments.
I should tell the House that in the 15 years since the inception of the Community there has been only one case in which it has been found necessary compulsorily to enforce a Community judgment, and that was in August 1972. It is necessary to understand the area in which these matters will arise. The cases in which this procedure will be necessary—and they will be rare—will probably be concerned with restrictive practices and monopolies involving penalties or fines for failure to end an infringement, or with discrimination in transport charges involving transport operators who fail to provide the requisite information or end discriminatory practices. The ordinary sort of cases which come before the High Court in civil actions in this country and, I presume, in the Court of Session in Scotland, will not in the least be affected by any of the matters that we are dealing with in these Statutory Instruments.
It is difficult to conjure up the kind of case in respect of which a criminal court would have to make a reference to the European Court. I find it difficult to think of such circumstances, but we have to make provision for the necessary

procedure because, as every lawyer and every Member of the House knows, circumstances can arise which are beyond the contemplation of parliamentary draftsmen, Ministers or Members, and it is necessary to provide the machinery for dealing with such situations should they arise.
It is difficult to think of the kind of case which a criminal court would refer to the European Court. The only example that comes to mind is when an action is brought against a person for an infringement of Customs duties and he puts forward the defence that no duty ought to be chargeable because it would be contrary to the provisions of Community law. It is difficult to contemplate any criminal cases being referred to the European Court, but there will be references arising in civil actions, for example, in such matters as restrictive practices and commercial undertakings in transport.

Mr. Clinton Davis: Is the right hon. and learned Attorney-General saying that there is no experience within the Community of criminal cases being referred to the European Court?

The Attorney-General: I have managed to find only one such case, which is indicative of the rarity of such references. It arose under an Italian law of 1938 which authorised officially-approved and controlled milk depots, and a breach of the exclusive rights was a criminal offence punishable by a fine. A dairy company was prosecuted under the 1938 law and raised the defence that that law was contrary to the Community rules about State monopolies. The European Court held that the exclusive concession provisions of the 1938 law were contrary to Community law. That is the kind of case with which we are dealing. European Court orders have to be enforced, and what we are debating now is the machinery whereby that can be done. The most likely area for references is that of restrictive practices and monopolies, discrimination in transport charges and conditions, and the rules of competition for transport by road, rail and inland waterways. Any order made by the Commission to impose fines or penalties is subject to appeal to the European Court. If the European Court upholds the Commission's decision, the judgment of the European Court becomes enforceable and the order implementing that finding has


to be enforced in this country. The designated national authority, whose function it will be to verify the formal authenticity of the incoming Community judgment in the United Kingdom, will be the Foreign Secretary. He or one of his officials will append it to an order of enforcement. He will state that the authenticity of the judgment has been verified and will order that it be registered for enforcement in the United Kingdom. Upon registration it will become fully enforceable.
There is also power to enforce Euratom inspection orders. It must be said that none has ever been made, and it is not likely that one will be made, but a procedure for enforcing them must be provided in the Supreme Court rules. This relates to inspection orders under which the Commission may send inspectors, for example, to ensure that nuclear materials are not diverted from their declared and intended uses.
Community judgments and Euratom inspection orders will have validity in the United Kingdom under the treaties, and the implementing machinery provided by the Order in Council approved in November 1972 will make them effective. The general practice will be similar to that under the Foreign Judgments (Reciprocal Enforcement) Act 1933, though there will have to be certain modifications.
There are nine new rules, and they speak for themselves. Rule 15 incorporates the definitions used in the Order in Council. Rule 16 provides for functions of the High Court to be exercised by a judge in Chambers or a Master of the Queen's Bench Division. Rule 17 provides for applications for registrations to be made ex parte. Rule 18 preserves the matters to be stated in affidavits in support of applications. Rule 19 deals with the maintenance of a register of Community judgments. Rule 20 provides for notice of registration to be sent to those against whom judgment is enforceable. Rule 20 also provides for variation or cancellation of registration within 28 days. Therefore, the Supreme Court will be given all the proper machinery.
The second part of the rules of the Supreme Court deals with references to the European Court and this is covered by a new Order 114. The effect of Article 177 of the treaty, and similar provisions in the other treaties, is to confer on

British courts and tribunals a power to refer to the European Court questions of validity and interpretation arising under the EEC and Euratom treaties. There is a duty to refer such questions when there is no judicial remedy under national law, namely when the question arises in a final court. It might be thought that in civil suits the House of Lords is the only final court, even though the Court of Appeal may refuse to grant leave to appeal to the House of Lords—and indeed the House of Lords may reject the petition for leave to appeal—but in criminal cases the Court of Appeal might be held to be the final court, because a certificate would have to be issued for there to be any further appeal to the House of Lords. The British courts also have a duty to refer questions governing the validity of Acts by the Commission under the European Coal and Steel Community Treaty.
All these powers and duties are directly applicable and the jurisdiction which is conferred on English courts derives from the treaties. The process of obtaining a preliminary ruling from the European court is in the nature of a preliminary determination of a point of law. The European Court does not and cannot purport to decide particular cases; it merely gives a preliminary ruling on the general law. The national court retains unimpaired its jurisdiction to decide the case, although it must do so in the light of the ruling by the European Court on the point of law.
Thus, the procedure will fall into the following stages. There will be a stay of proceedings in the national court when it decides to exercise its power to refer a question to the European Court. That court would then prepare a formal statement of the question of Community law for transmission to the European Court. The European Court would then be notified of what had happened and the procedure in the European Court on such a reference would be governed by the statute and rules of procedure applying to the European Court. When the matter is determined by the European Court, that court would notify the decision to the national court which has made the reference and the case would then proceed in the national court.
The hon. and learned Gentleman asked about the delay which might arise on a


reference. The delay would probably be about the same as now occurs in this country in civil actions between the court of first instance and the Court of Appeal—in other words, of the order of five months. This matter must be looked at in the context of the kind of issue which would have to be considered by the European Court. It would involve matters of restrictive practice, monopolies or unfair competition, and would have to be a specific matter requiring reference to the European Court.
The procedure is set out on page 7 of the Rules of the Supreme Court (Amendment No. 3) 1972 Statutory Instrument. The first rule deals with definition. The second rule provides that an order may be made by the court of its own motion or on application by a party to the trial, and there is a provision that no order shall be made except by a judge in person. Rule 3 provides that the order
shall set out in a schedule the request for the preliminary ruling of the European Court, and the Court may give directions as to the manner and form in which the schedule is to be prepared".
References will be made by the national court in much the same way as the procedure for a case stated is now presented by parties in the High Court. It is expected that the parties would draft the questions for reference, so that they could be settled by the national court.

Mr. Ronald King Murray: In dealing with Order 114 the Attorney-General also mentioned tribunals, and I wonder whether he did so inadvertently, since I notice in the rules no reference to tribunals. Do the Government have in mind any procedure for tribunals that is not embodied in these rules?

The Attorney-General: I am sorry if I introduced the subject of tribunals. Any reference governed by these rules would be made by the High Court or Court of Appeal. In principle, there is no reason why a reference could not be made by a magistrates' court, but this is extremely improbable because of the subject matter and the issues involved. If it was the final court in civil matters it might well be the House of Lords which would make the reference, in order that it should receive the law from the European Court on that issue and on that point of law.
Rule 4 provides for the stay of proceedings unless the court otherwise orders. Rule 5 provides the machinery of transmission to the European Court. Rule 6 provides for appeals from orders made by the High Court. It provides that an order shall not be deemed to be a final decision and that appeal shall lie to the Court of Appeal without leave so that if the High Court proposed to make a reference there would be an appeal without leave against that decision to the Court of Appeal. The reference would normally be stayed until the Court of Appeal had heard the argument and made its own decision as to whether there should be a reference.

Mr. Clinton Davis: Would that apply equally to the Crown Courts dealing with criminal cases?

The Attorney-General: There would be a stay, or there could be a stay. It is difficult to contemplate the kind of case in which a criminal court or a Crown Court with a jury would need to stay proceedings. The hon. Gentleman will see in the provisions of the rules that any such steps can be taken to provide and to give instructions on the form and manner in which the schedule is to be prepared, and that the court can on an application grant bail or do whatever is necessary pending the ruling of the European Court. It may be that a court may decide not so to do and may proceed to complete the issues which are before it and not to make the reference. The only example I can find is the Italian criminal case. I find it difficult to see how a Crown Court will ever be in a position to contemplate making a reference. Nevertheless, we have to provide the rules and the machinery in case such an unlikely situation should arise.
Over the page there is the draft Form No. 109 which sets out the model form of order for reference to the European Court. It begins with the general indication of the Treaty provision or Community act or instrument with which the reference is concerned, and then orders the proceedings to be stayed until the European Court gives its ruling or until further ordered. The schedule indicates very generally the form in which it is envisaged that the court will couch its request to the European court—namely, a brief statement of the case from which


the request arises, followed by the question or questions for the ruling of the European court. These should be set out as briefly and succinctly as possible.
That is the order which establishes this machinery for the procedure to be followed when the Supreme Court makes a reference. The other two orders which are discussed with this order are the Crown Court rules and the criminal appeal rules which make provision should it ever arise that there needs to be a reference. Nevertheless, the House must bear in mind the nature and area of the law which would be under consideration when there is the necessity to make a reference. It is obviously a limited and a particularly specialised field. The rules of the Supreme Court have to be made to deal with that and that is what these rules do.

6.55 p.m.

Sir Arthur Irvine: I intervene because of the anxiety that I and many others feel that entering into the Community may involve a greater surrender than we realised. I mean the powers of Parliament but I refer also to our judiciary and our system of law. That being so, on occasions like this when rules of this kind are under discussion, the right hon. and learned Gentleman will find hon. Members on this side of the House often seeking assurances of one kind or another.
The rules which we are dealing with seem to be, I must confess, open to little objection in the context to which I have referred. As I understand it—and I should be grateful if the right hon. and learned Gentleman will confirm this or point to any respect in which I am mistaken—the amendment to Order 71 of the Rules of the Supreme Court places the European Community judgments, so far as execution and enforcement are concerned, on the same footing as judgments obtained outside the jurisdiction under the existing law.
The right hon. and learned Gentleman referred to certain modifications which were necessary in dealing with Community judgments. I take it that these are not modifications that in any way go to the substance of the matter and that Community judgments can be broadly dealt with as being like any other foreign

judgment which it is sought to be enforced in this country. The Foreign Judgments (Reciprocal Enforcement) Act provides that once registered, subject to certain safeguards, a foreign judgment can be treated as if it were the judgment of an English court. My understanding is that that is the machinery which is operated in the present statutory instrument.
I turn to the matter of reference to the European Court for a preliminary ruling. The right hon. and learned Gentleman dealt with this matter and it is clear that the ruling given by the European court on a reference cannot have the character of a judgment so as to be enforceable under Order 71 as amended by this instrument. He made that clear, I think, but I should be grateful for reassurance on the point. I should think that the preliminary ruling would not have the character of an enforceable judgment. Of course, the preliminary ruling on a point referred by the English court may often be conclusive on the substance of the issue of litigation. Even so, I take it that the procedure will be for the European Court, in such a case, to send back to the English court its decision on the preliminary point and, the action having been stayed in this country, the English court would then make an order and enforcement and execution would follow our own procedure thereafter. I should be grateful to know whether that is what is anticipated.
I ask for assurances on the points that I have mentioned. Certainly the Opposition will watch the statutory instruments on these subjects with vigilant care, because the feeling is growing that in joining the EEC in the way that we have we may have given away more than we knew.

6.59 p.m.

Mr. Clinton Davis: I, too, feel that we are sailing here in uncharted waters. I sympathise with the Attorney-General, who will find it very difficult to answer the points raised by my right hon. and learned Friend the Member for Liverpool, Edge Hill (Sir A. Irvine).
While I understand the point that the Attorney-General made that it was unlikely that a reference to the European Court would arise with any great


frequency, I think that the House expected from the right. hon. and learned Gentleman a speech which gave clearer indications of the kind of delay which could be anticipated when a reference was made. I understand that the right hon. and learned Gentleman cannot cite any authorities because very few are available, but surely it was possible for his Department or that of the Lord Chancellor to make some inquiries from the European Court to elicit some information on this point—

The Attorney-General: The hon. Gentleman could not have heard me. I said that the delay was five months.

Mr. Davis: I apologise to the Attorney-General. However, that seems to be an inordinately long period to wait for a reference from the European Court when we are told that it has so little to do in this connection. Has the right. hon. and learned Gentleman's Department made any representations to the European Court to determine why it should take this length of time? Is not it possible to expedite the proceedings?
References are likely to arise with greater frequency in commercial cases, in cases where perhaps injunction proceedings are contemplated or are undertaken, and a delay of five months where normally speaking there would be a stay on the proceedings would be an inordinate period to wait. I do not say that that would always be a prejudicial situation, but, in a situation where one party has applied for an injunction and the other party is seeking to resist it, it is conceivable that a delay of that kind would be quite wrong.
I appreciate that the rules say that normal proceedings will be adjourned pending the European Court's ruling. It is not a mandatory provision. Clearly for the most part courts will want to adjourn proceedings to obtain confirmation of the European Court's point of view on any matter to which reference is made. I ask the Attorney-General to indicate whether it is possible to persuade those administering the European Court to cut down this excessive period of five months.
There is one other matter that I wish to raise. Perhaps it was in another passage of the right hon. and learned Gentleman's speech that I missed. If it was, I apolo-

gise. Unfortunately, my attention was diverted for a moment. Within the compass of time of which the right hon. and learned Gentleman has spoken, is there any possibility of the period being diminished, or will this be the minimum period within which a reference can be obtained?
Where a reference is made under the aegis, so to speak, of one of the litigants will the legal aid system extend to it? I assume that the answer is that it will, because I also assume that the reference would be part of the litigation in question. Perhaps the Attorney-General can help on that point as well.
I hope that the right hon. and learned Gentleman's feelings about the infrequency of references in criminal proceedings will be borne out by events. If we are to anticipate delays of five months and the right hon. and learned Gentleman is wrong about the frequency of these references, we may have a situation where a man is held in custody, possibly pending an appeal, already for an inordinate length of time, and he will have to experience a further delay of some five months. I think that most references will be made in civil rather than in criminal litigation, although the right hon. and learned Gentleman has referred to the possibility of references being required in connection with the legality of customs duties and so on. But I hope that the right hon. and learned Gentleman will be able to clear up these specific points. One of the difficulties which may arise is that practitioners who are asked to advise on these matters, however infrequently the situation may arise, will be asked the delay and the effect of delay of the litigation.

7.7 p.m.

The Attorney-General: With the leave of the House, perhaps I might reply to the points raised by the right hon. and learned Member for Liverpool, Edge Hill (Sir A. Irvine) and the hon. Member for Hackney, Central (Mr. Clinton Davis).
The hon. Member for Hackney, Central asked about the delay. The five months is an average. In certain cases it may be much less. In a heavier case it may be longer. This is the average, and it is similar to the delay which occurs here between a case in first instance and the appellate procedure between the High Court and the Court of Appeal.
We have a Scottish judge and an English advocate-general who have joined


the European Court of Justice. I am sure that their skill, expertise and talent will have a great effect upon that court. Both are men of outstanding ability. I have no doubt that with their influence all these procedures will be considered, and I hope that the least delay possible will occur.
In a criminal case resulting in an adjournment for that length of time, it is inconceivable that bail would not be granted.
Turning to the point raised by the right hon. and learned Member for Liverpool, Edge Hill, the rules of the Supreme Court put Community judgments in substantially the same position as foreign judgments under the 1933 Act. There are certain differences because a Community judgment is automatically registrable once it has the certificate of the Foreign Secretary, and enforcement can be stayed only by the European Court.

Mr. Ronald King Murray: Will the right hon. and learned Gentleman confirm, either now or later, that the procedure contemplated by the Supreme Court of Judicature Rules with which we are dealing applies to a decision of the Council or Commission imposing a pecuniary obligation under Article 192 of the Treaty which is enforceable as a court order?

The Attorney-General: Yes, I can so confirm that to the hon. and learned Member.
I can give the second assurance which the right hon. and learned Member for Liverpool, Edge Hill sought. As would be anticipated, as a former Law Officer he interpreted the provisions in the rules perfectly correctly. The ruling of the European Court on this particular point would be a ruling of law which would be binding on the United Kingdom court, but it would refer only to that particular point. It remains with the United Kingdom court to make a substantive decision on the whole issue.
With those comments in respect of the questions which have been posed, I invite the House to accept this machinery proposed for the Supreme Court in these matters of judgment and reference.

Mr. Ronald King Murray: The House is indebted to the Attorney-General for

the clarification he has given to these matters. I cannot say that all the doubts of the Opposition have been resolved, but certainly the right hon. and learned Gentleman has contributed to the resolution of some of them.
My right hon. and learned Friend the Member for Liverpool, Edge Hill (Sir A. Irvine) raised the interesting question of the likeness of these provisions to the enforcement of judgments reciprocal provisions legislation. I think it appropriate to point out, having intervened during the last contribution by the Attorney-General, that Article 192, imposing pecuniary obligations on persons, is of course quite different from the judgment of a court. In that sense we are breaking entirely new ground and using enforcement machinery normally stemming from a judicial authority of some kind for matters which are not judicial, but are administrative decisions. This is a considerable departure from the administration of justice in this country.
There are still doubts on this side of the House and I echo the words of my right hon. and learned Friend the Member for Liverpool, Edge Hill who said that we shall continue to watch these matters with every vigilance and care. But in the circumstances I do not recommend my hon. Friends to vote against these statutory instruments.

Question put and agreed to.

Resolved,
That this House takes note of the Criminal Appeal (References to the European Court) Rules 1972(S.I., 1972, No. 1786), dated 21st November 1972, a copy of which was laid before this House on 1st December.

Orders of the Day — NATIONALISED INDUSTRIES

Ordered,
That Mr. John Prescott be added to the Select Committee on Nationalised Industries.—[Mr. Humphrey Atkins.]

Orders of the Day — MAPLIN DEVELOPMENT BILL

Ordered,
That Mr. Dick Douglas, Mr. David James, Mr. Alexander Lyon, and Mr. Michael McNair-Wilson be members of the Select Committee on the Maplin Development Bill.—[Mr. Humphrey Atkins.]

Orders of the Day — DELEGATED LEGISLATION

Ordered,
That it is expedient that a Joint Committee of both Houses be appointed to scrutinise delegated legislation.—[Mr. Humphrey Atkins.]

Message to the Lords to acquaint them therewith.

Orders of the Day — STATUTORY INSTRUMENTS (JOINT COMMITTEE)

Motion made, and Question proposed.

That a Select Committee be appointed to join with a Committee to be appointed by the Lords to consider:—

(1) Every instrument which is laid before each House of Parliament and upon which proceedings may be or might have been taken in either House of Parliament, in pursuance of an Act of Parliament; being

(a) a statutory instrument, or a draft of a statutory instrument;
(b) a scheme, or an amendment of a scheme, or draft thereof, requiring approval by statutory instrument;
(c) any other instrument (whether or not in draft) where the proceedings in pursuance of an Act of Parliament are proceedings by way of an affirmative resolution; or
(d) an order subject to special parliamentary procedure.

(2) Every general statutory instrument not within the foregoing classes, and not required to be laid before or to be subject to proceedings in this House only, but not including Measures under the Church of England Assembly (Powers) Act 1919 and instruments made under such Measures,
with a view to determining whether the special attention of the House should be drawn to it on any of the following grounds—

(i) that it imposes a charge on the public revenues or contains provisions requiring payments to be made to the Exchequer or any Government Department or to any local or public authority in consideration of any licence or consent or of any services to be rendered, or prescribes the amount of any such charge or payments;
(ii) that it is made in pursuance of any enactment containing specific provisions excluding it from challenge in the courts, either at all times or after the expiration of a specific period;
(iii) that it purports to have retrospective effect where the parent Statute confers no express authority so to provide;
(iv) that there appears to have been unjustifiable delay in the publication or in the laying of it before Parliament;
(v) that there appears to be have been unjustifiable delay in sending a notification under the proviso to subsection (1) of sec-

tion four of the Statutory Instruments Act 1946, where an Instrument has come into operation before it has been laid before Parliament;
(vi) that there appears to be a doubt whether it is intra vires or that it appears to make some unusual or unexpected use of the powers conferred by the Statute under which it is made;
(vii) that for any special reason its form or purport call for elucidation;
(viii) that its drafting appears to be defective; or
on any other ground which does not impinge on its merits or on the policy behind it; and to report their decision with the reasons thereof in any particular case.

That Mr. Ronald Bell, Mr. Albert Booth, Mr. Edward Gardner, Mr. Arthur Latham, Mr. Ernle Money, Mr. Ronald King Murray, and Mr. David Waddington be members of the Committee.

That Two be the Quorum of the Committee.

That the Committee have power to appoint one or more Sub-Committees severally to join with any Sub-Committee or Sub-Committees appointed by the Committee to be appointed by the Lords; and to refer to such Sub-Committee or Sub-Committees any of the matters referred to the Committee.

That the Committee and any Sub-Committee appointed by them shall have the assistance of the Counsel to Mr. Speaker and, if their Lordships think fit, of the Counsel to the Lord Chairman of Committees.

That the Committee have power to sit notwithstanding any adjournment of the House and to report from time to time, and that any Sub-Committee appointed by them have power to sit notwithstanding any adjournment of the House.

That the Committee and any Sub-Committee appointed by them have power to require any Government department concerned to submit a memorandum explaining any instrument which may be under their consideration or to depute a representative to appear before them as a Witness for the purpose of explaining any such instrument.

That the Committee and any Sub-Committee appointed by them have power to take evidence, written or oral, from Her Majesty's Stationery Office, relating to the printing and publication of any instrument.

That the Committee have power to report to the House from time to time any Memorandum submitted to them or other evidence taken before them or any Sub-Committee appointed by them from any Government department in explanation of any instrument.

That it be an Instruction to the Committee that before reporting that the special attention of the House be drawn to any instrument the Committee do afford to any Government department concerned therewith an opportunity of furnishing orally or in writing to them or to any Sub-Committee appointed by them such explanations as the department think fit.

That it be an Instruction to the Committee that they do consider any instrument which is directed by Act of Parliament to be laid before and to be subject to proceedings in this House only, being—

(a) a statutory instrument, or draft of a statutory instrument;
(b) a scheme, or an amendment of a scheme, or a draft thereof, requiring approval by statutory instrument; or
(c) any other instrument (whether or not in draft), where the proceedings in pursuance of an Act of Parliament are proceedings by way of an affirmative resolution;
and that they have power to draw such instruments to the special attention of the House on any of the grounds on which the Joint Committee are empowered so to draw the special attention of the House; and that in considering any such instrument the Committee do not join with the Committee appointed by the Lords.—[Mr. Humphrey Atkins.]

7.15 p.m.

Mr. Edward Taylor: I wish to ask a brief question. I wrote a letter to the Table Office some time ago to ask about what appeared to me an unusual use of powers under a statutory instrument. I was told that this Committee did not exist at the time but that it was to be revived. I understand that we are reviving it in this way. What has happened to delegated instruments in the interim, for there has been a gap? This committee does extremely valuable work. It has to look at statutory instruments and to consider whether an unusual use has been made of powers. Statutory instruments are very significant. They are not major legislation, but they can affect quite important matters. It is important to know what has been happening to statutory instruments which have been passed in the interim period.
I am one of, I believe, a small number of hon. Members who get the full list of statutory instruments every day. Normally we get about eight. Sometimes they deal with small matters, such as the amalgamation of police authorities and on other occasions they deal with the marketing of eggs, but I think we can all recall occasions when statutory instruments have been used for very important matters. I think I can recall that a statutory instrument was used to suspend the constitution of British Guyana. This shows the wide range and importance of statutory instruments. Everyone in the House concerned with the preservation of democracy wishes to make sure that statutory instruments shall not go beyond the

powers which are actually delegated. We should not have a situation in which a statutory instrument makes an unusual use of powers.
If I recall the situation correctly, the committee has three broad bands of interest to consider. The important one is whether a statutory instrument makes an unusual use of delegated powers. I ask two questions on this. First, how long has been the period during which this committee has not been in existence? That is a very important question. Secondly, who on behalf of the House of Commons, or who on behalf of the Government, has been reviewing these statutory instruments in the interim? In other words, what has been happening in the meantime? I think all conscientious hon. Members look at statutory instruments every day to see whether something stands out a mile as unusual. Therefore I should like to have an answer to these rather important points.
I think the Leader of the House may recall that I sent a note to him on this important issue of the Statutory Instruments Committee. He was very courteous, as always, in his reply. I said, "Here is a statutory instrument which I believe makes an unusual use of delegated powers." He sent me a very courteous letter saying that he hoped that the Joint Committee would be set up soon. For how long have we not had a committee? Secondly, what has happened to statutory instruments which have been laid before the House in the interim? Who has been considering them, and who has been making sure that they do not make an unusual use of delegated powers? I should be grateful to have a reply to these questions.

7.18 p.m.

The Lord President of the Council and Leader of the House of Commons (Mr. James Prior): I apologise to my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor) for not being present in the House at the start of this debate. I was not expecting that it would come on so early and I did not think that tonight we should need to discuss it. I can tell my hon. Friend that we had a very long discussion on this Joint Committee just before Christmas on a day which we gave up to procedural motions. The motion we are now considering arises


out of that debate and discussion and also out of the Brooke Committee's Report.
My hon. Friend the Member for Glasgow, Cathcart asked two specific questions. We have not had a Statutory Instruments Committee for the whole of this Session, since November. We have been waiting to set up this committee which we hope in time will be followed by the sister committee, the merits Committee, which will enable many more statutory instruments to be discussed in committee, not necessarily to avoid debating them on the Floor of the House but to give an additional opportunity for hon. Members to take part in those discussions.
Statutory instruments which have been laid before the House in the period between the beginning of this Session and now have not been considered by any Committee of the House. Therefore, up to a point we have had to take the risk whether they were ultra vires or whether anything else was wrong with them.
A number of hon. Members on both sides of the House take a great interest in these matters. I believe that had they thought that a statutory instrument was not in conformity with the rules of the House, they would have quickly pointed it out. I hope that this Committee will start its work quickly.
In the next few days I hope to put on the Order Paper the terms for a merits Committee. This will obviously need about a fortnight before we discuss it, and I should expect there to be a discussion on it. I hope that we shall also have a merits Committee.
The purpose of a merits Committee is not to deny opportunities for the House as a whole to debate important statutory instruments; it is to give an additional opportunity for the many statutory instruments, whether they be subject to affirmative or negative resolutions, to go to a small committee for examination. I think that in the long run this will meet the convenience of the House. I am sorry that this committee has not been set up before, but it has taken some time to arrange a debate on procedure and to get this under way. I hope that the House will agree to allow the committee to be set up.

Question put and agreed to.

Message to the Lords to acquaint them with such of the said orders as are necessary to be communicated to their Lordships.

Orders of the Day — ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Weatherill.]

Orders of the Day — ROLLS-ROYCE LIMITED

7.22 p.m.

Mr. John Stonehouse: In the House over two years ago the then Minister of Aviation Supply made a statement of the utmost gravity—namely, that Rolls-Royce Ltd. was proposing to make itself bankrupt. That was because Rolls-Royce had been advised that it was unable to meet the expected liabilities under the RB211 engine contract which had been entered into with the Lockheed Corporation.
In the statement, the Minister said:
As the Board of Rolls-Royce have stated, the loss of resources already committed to the project combined with the losses which will arise on termination are on such a scale that they are likely to exceed the net tangible assets of the company. In the light of this situation the board have decided that they have no alternative but to ask the trustees of the debenture holders to appoint a Receiver and Manager."—[OFFICIAL REPORT, 4th February 1971; Vol 810, c. 1922.]
It has become quite clear since that date that the board of Rolls-Royce was ill-advised to go into bankruptcy, because it would have been possible to renegotiate the contract with the Lockheed Corporation without the extreme step of bankrupting almost the, if not the, leading engineering company in the United Kingdom.
The effects of that bankruptcy have been felt by British exports in all corners of the globe. It is indeed regrettable that it took place. The bankruptcy undoubtedly took place because of the pressure that the Government put on Rolls-Royce and the advice that was given by the Government to the directors of Rolls-Royce at that time.
I wish to draw two points to the attention of the House at the opening of this debate because they are relevant to the point to which I want to come. The first


point is that the bankruptcy was brought about not by a general failure of Rolls-Royce business activities on a broad front, and not by a failure of other projects, but because—this is confirmed by what the Minister said on 4th February 1971—the expected liabilities under the RB211 contract with the Lockheed Corporation would be greater than the assets that Rolls-Royce could command.
The second point is that the Government were undoubtedly responsible for both the advice leading to the decision of the directors to go bankrupt and the pressures that were being put on the directors at that time.
The Rolls-Royce situation is unique. There has been no bankruptcy like it before and I hope that there will not be one like it again. Because the circumstances are entirely unique I believe it is reasonable and fair for the Opposition to raise points about the Government's responsibilities towards those who have been directly affected by this bankruptcy.
Had it been a normal bankruptcy of a company going on the rocks because, due to inefficient organisation'and running, it was unable to meet its liabilities in ordinary terms of trade, anyone associated with it, whether workers, shareholders or suppliers of components and raw materials, must take the consequences. However, we are not talking about a bankruptcy of that character; we are talking about a bankruptcy that was brought about by the Government in their unwisdom. We are also talking about a bankruptcy brought about not by a general failure of the business but by the failure of the company to see through a particular engine contract with the Lockheed Corporation—a priced contract which it could not fulfil with its existing resources.
In the event, that contract was renegotiated on more favourable terms to the new Rolls-Royce company. This could have been done without the bankruptcy having to take place. Certainly there was everything in the interests of the Lockheed Corporation to renegotiate the contract because the whole of the TriStar programme was dependent upon the RB211 being provided as the engine power. If that had been withdrawn it would have been difficult for the Lock-heed Corporation to have re-engined the

aircraft and met its commitments to airline customers.
I emphasise that I am raising the issue about the Government's responsibility because this is a unique bankruptcy brought about by the Government, and therefore they must bear the responsibility for its effects.
Another point which I think needs reiterating is that the RB211, which was the only reason for Rolls-Royce going bankrupt at the time, was a 70 per cent. Government partnership project. As the Chancellor of the Exchequer pointed out in the debate on 8th February 1971, the Labour Administration:
made arrangements to provide launching aid of up to £47 million. That was intended to cover 70 per cent. of the estimated cost of launching the engine, which was then put at £65 million. Later, the estimated cost was increased to £75 million."—[OFFICIAL REPORT, 8th February 1971; Vol. 811, c. 52.]
So the Government were 70 per cent. partners in the RB211 project.

The Under-Secretary of State for Trade and Industry (Mr. Cranky Onslow): Can the right hon. Gentleman refresh my memory on this point? When that increase occurred, did the Government correspondingly maintain its share of the venture?

Mr. Stonehouse: The Government took steps to assist Rolls-Royce in its financial needs by the Industrial Reorganisation Corporation's making funds available of £10 million, and a further £10 million was also due to be made available. The Government were quite prepared to provide extra sums to Rolls-Royce to enable it to fulfil its responsibilities. When the Rolls-Royce RB211 contract project was decided upon the principle was that the Government would have a 70 per cent. share in the project. So this is again a case of the responsibility of the Government, as a majority partner, being intertwined in this project.
The effect of the bankruptcy of Rolls-Royce, and the subsequent State ownership of the remnants of Rolls-Royce in Rolls-Royce (1971) Limited, has been that the new Rolls-Royce company has gone on with practically the whole of the old business that the former Rolls-Royce company conducted. In fact, under the terms of clause 8 of the agreement made between the receiver, Rolls-Royce Limited and Rolls-Royce (1971)


Limited, and the Minister of Aviation Supply on 17th March 1971, it is quite clear that Rolls-Royce shall not commence any new trade or business, but shall concentrate on the old business with which Rolls-Royce Limited was concerned. So the whole policy of the Government in establishing the 100 per cent. State-owned Rolls-Royce (1971) Limited was to enable Rolls-Royce to continue all its business of supplying aero-engines and spare parts and, of course, to carry on with the RB211 contract once it had been renegotiated.
Here again we see a most unusual example of bankruptcy. Normally, when a bankruptcy takes place somebody moves in, takes over the old company, breaks it up and sells the profitable bits. Some of these bits are continued and some are not; they are spread all round the place. In this case the Government took special and immediate steps to ensure that the business of Rolls-Royce went on almost as though nothing had happened. The Royal Air Force continued to buy engine parts and other equipment which it urgently required to keep its aircraft in the air and the overseas customers continued to buy from Rolls-Royce the spare parts and other equipment which they required.
Rolls-Royce went on with most of its research and development programme virtually as though nothing had happened. Of course, there were economy campaigns, cutting down on overheads, and the like, but to the world at large Rolls-Royce has gone on as though nothing has happened. The Government took great pains to ensure that Rolls-Royce continued in business and they assured the overseas customers that they would continue to have the sort of service that they had enjoyed before. So this is a most unusual bankruptcy.
What has happened, however, is that the worker shareholders have lost their money, although they may get a pittance when the receiver has done his job. But, in particular, the suppliers of Rolls-Royce have lost a considerable sum of money already, and the Government have done nothing to take into account the interests of the suppliers, who probably amount to many hundreds spread up and down the land. It is their interests that I seek to raise in the House tonight, because I think that the Government have a debt of

honour to those companies which supplied Rolls-Royce right up to 3rd February 1971 believing that the Government were behind Rolls-Royce and that therefore it would be without risk that they would be supplying Rolls-Royce with the raw materials, spare parts and components that Rolls-Royce needed to carry on its business. As the Government had been publicly announced as a 70 per cent. sharer in the RB211 engine project, and as the Government had been publicly announced to be putting £10 million of IRC money into Rolls-Royce, any supplier would have been quite within his rights in assuming that the Government were determined to see the business of Rolls-Royce through and would not renege on their responsibilities as such a strong partner in Rolls-Royce.
That was why so many companies went on supplying Rolls-Royce to the bitter end, without question. If Rolls-Royce had been an ordinary company, in the ordinary run of business, those companies would have decided long before that supplies would have to be cut off; they would not have taken the risk of supplying a company that appeared to be going down into some sort of bankruptcy. But the Government were very closely involved, and no doubt on occasion there was a nod or a wink to those suppliers that everything would be all right, that the Government were determined to back Rolls-Royce to the hilt and certainly were going ahead with the RB211 contract. which was the best contract this country had ever negotiated. Those nods and winks went on, so that the suppliers were lulled into a sense of security and went on supplying Rolls-Royce to the bitter end.

Mr. Onslow: May I seek clarification again? Is the right hon. Gentleman speaking of the time before or the time after the last General Election when he talks of those nods and winks, and so on? Is he speaking of the Government of which he was once a member, or of this Government?

Mr. Stonehouse: I am speaking of both Administrations and I am certain that this Administration were also responsible for giving the impression that they would honour their responsibilities as a major project participant with Rolls-Royce. Certainly that is the impression that many suppliers had, and we have to


bear in mind not only the legal definition of the Government's responsibility but also what hundreds of suppliers thought was the position at that time and still think is the position today.

Mr. Philip Whitehead: Does not my right hon. Friend agree that many sub-contractors believed, on about 10th or 11th November 1970—well into the period of this Administration—that the further Government assistance given to Rolls-Royce Limited was not contingent on the accountants' report and would make the company buoyant, and that they had every confidence in continuing to supply goods to the firm.

Mr. Stonehouse: Yes, at various times—in particular, in November 1970, the Government gave fairly clearly assurances that they would back Rolls-Royce. The suppliers were clearly under this impression. Now, more than two years after the Government-induced collapse of Rolls-Royce Limited, these suppliers have been paid a tiny amount towards the costs that they incurred in supplying Rolls-Royce with raw materials and components until 4th February 1971.
I am not sure of the total amount outstanding. Will the Minister say exactly what is outstanding to the suppliers who have over the years, and particularly in the last few months up to the bankruptcy, supplied Rolls-Royce? I believe that it runs to tens of millions of pounds, but no one has been able to obtain a correct estimate. The Government should give it to the House tonight.
About 15 per cent. has been paid up. A mere 15 per cent. after two years is a miserable sum of money. It does not even cover the interest charges on the money which the suppliers have to borrow to finance the outstanding debt. The 15 per cent. has been paid out on agreed invoices only. There is a tremendous backlog of invoices which have not been checked because the liquidator and others concerned have insufficient staff. Many suppliers have received 15 per cent. on only part of the money outstanding, and this compounds the problem they have to face.
Many large firms are concerned, but there are also many small firms which can ill-afford the sort of loss they are having to bear as a result of the Govern-

ment's dishonesty. I say "dishonesty" advisedly and I shall refer to that later. One company—Avica—is, I believe, owed about £80,000. The chairman of the company wrote to the Financial Times about this problem on 12th April 1972—well over a year after the collapse. It is now nearly a year since he wrote to the Financial Times, and still nothing has been done to meet his problems and those of the other small suppliers who are owed sums from about £50,000 to £100,000 apiece.
These companies need an answer from the Government. It is not sufficient for the Minister to try to shelve the responsibility. He may be preparing to tell the House that the Government are not involved in this problem and that it is all to do with the new directors of Rolls-Royce (1971) Limited and the liquidator. I advise him not to say that. It would be the height of dishonesty and evasion. The buck on this issue stops on the Treasury Bench and cannot be passed to the new directors, the receiver or the liquidator. The buck stops there, because it was the Government who made Rolls-Royce bankrupt, and it was the Government who nationalised the old Rolls-Royce and appointed the new directors of Rolls-Royce (1971) Limited. The Government are one of the major customers, buying, on behalf of the Royal Air Force, engines and equipment which contain components and raw materials supplied to the old Rolls-Royce company before it collapsed. The Government have a total legal and moral responsibility, and it will not be good enough for them tonight to pass on the problem to the liquidator or the new directors.
The Government have been buying from Rolls-Royce (1971) Limited equipment which includes materials supplied before the date of the bankruptcy. It is this aspect that can rightly be described as dishonest, because the Government are getting a financial advantage from the suppliers for which they are unwilling to reimburse them. That is another reason why this Government must come clean tonight and face their responsibilities.
Some people will use strong language about this issue. They will say that the Government have embezzled the resources of the sub-contractors who supplied goods and equipment to Rolls-Royce that have since been supplied to


the Royal Air Force as finished equipment. I do not know what terms to apply.
As one of the Ministers responsible for aviation questions in the Labour Administration, I have some personal responsibility for the situation that has arisen. I believe that all Governments should accept a continuing responsibility for events of this character. Had the Labour Administration continued in office we would never have allowed this situation to have arisen. We would have honoured the responsibilities of the Government to the suppliers of the old Rolls-Royce Company. I ask the Government to honour their responsibilities and not to hide behind the new directors or the liquidator. The buck stops on the Treasury Bench. I hope that there will be a message tonight from the Under-Secretary of State that the Government see their responsibilities, are prepared to honour them, and will shortly make an announcement about the special financial assistance they will ask the House to vote to enable the Rolls-Royce suppliers to receive compensation for their supplies to Rolls-Royce before the bankruptcy.
A further reason why this action would be to the advantage of the Government is that many of these small companies are the life-blood of the country's engineering strength. They provide much of the raw materials, the components and the systems that go into the finished products which are sent overseas, in terms of high technology exports. Any support we can give these companies will assist them in re-equipping themselves to face the battles of the export drive in the coming years. If the Government, in their wisdom, can afford to provide money to Clydeside and other lame ducks, there is no reason why they should not go out of their way to vote money which is due, in all honour, to the sub-contractors. It is by no means a subsidy. It is a debt of honour to them, but it will also give them some of the support they need at this critical time to re-equip themselves and build up their strength for the future.
Will the Under-Secretary tell us what representations he has received from industry about this whole matter, what replies he has sent and, generally, what further action he proposes to take to deal with the situation that I have explained?

7.51 p.m.

Mr. Philip Whitehead: I congratulate my right hon. Friend the Member for Wednesbury (Mr. Stone-house) for raising this important topic. I congratulate him particularly on behalf of all my constituents upon whom the blow fell with particular severity on 4th February, two years and 10 days ago. We are discussing a debt of honour, as my right hon. Friend said. When the Under-Secretary was a back bencher he anxiously questioned the then Minister on behalf of his constituency interests about these matters. No doubt he will recollect the anxiety we all felt on behalf of the sub-contractors in particular, and all of those involved in the wholesale shakeout which followed the bankruptcy.
I go along with my right hon. Friend in saying that hindsight strengthens the view that many of us expressed at the time that this was an exemplary bankruptcy and that it was carried out hastily and unwisely. Those of us who asked at the time what real efforts had been made to contact the chairman of Lockheeds—Mr. Haughton—between 26th January and 4th February 1971, have learned not from the Government—because this matter has never been raised or debated here, any more that the White Paper on the circumstances of the collapse has been debated—but from other sources that some efforts, too little and too late, were made to draw Lockheeds into the process of renegotiation, an action which might have averted the need for the bankruptcy.
The undertakings which were given even before the bankruptcy, and even before the Cooper Brothers report was in the Government's hands, were sufficiently convincing to the sub-contractors in my constituency and elsewhere—I am sure that my hon. Friend the Member for West Lothian (Mr. Dalyell) will raise this point also—to make them go on supplying the old firm of Rolls-Royce for many months, during which it was clear to many people, including some who had previously been on the board of Rolls-Royce and who had substantial shareholdings in the company, that the company was in deep trouble. Sub-contractors in my constituency continued, out of loyalty, to supply Rolls-Royce when the repayment for their supplies was reaching them first after a delay of three months,


then after a delay of six months, then after a delay of nine months and finally, of course, not at all.
One of the reasons for continuing to make these supplies available was that they were assured, not necessarily directly by the Government of the day but by way of an understanding from the company at that time, that after November 1971 there was outstanding a further financial guarantee to the company, that it was not contingent upon the report of the accountants, that the company was therefore solvent, that it would continue to trade, and that the debts owed to them would be honoured. We know what happened. The over-pessimistic—as it turned out—report of Cooper Brothers was taken aboard in toto by the Government of the day, and the firm went bankrupt.
There was a severe fall-out for all of my constituents and for people in other areas who depended upon the company. The ordinary shareholders to this day have not seen a penny of their money, nor may they ever. There was a particular problem for the worker shareholders, to whom my right hon. Friend has already referred. These were the people in the work force who had accepted shares in the company up to a limit of £500 in lieu of their salary—shares which were often held as a nest egg by the families concerned, sometimes for a generation, sometimes handed down through the family. They could not be sold on the ordinary market but they could always be sold back to the company at a guaranteed value. They were a hedge against inflation and financial difficulties for the workers concerned.
In November 1970 my constituents who were worker shareholders were told by the company that there were financial difficulties at the time and that the company could not buy back the workers' shares. They were told that the company had to "lock them in" for the time being, until things improved. Once again the worker shareholders, and sometimes their widows who still held the shares, acquiesced. That attitude came of a lifetime's loyalty to the company. They told the company that they would not make a fuss or try to take civil action against it; that they would agree and that they wished the company well.

Their reward was the bankruputcy of 1971. From that day to this no worker shareholders have seen a penny of the money owed to them for their holdings in the old company. Nor are they likely to, judging from statements by the Under-Secretary and the Department. The money is owed to them for the shareholdings in the old company.
We now come to the question of the sub-contractors. Wherever I go in my constituency, visiting small suppliers—engineering firms, printing houses, the man who provided the newspapers, the man with the window cleaning contract or the people who were cutting metal on a sub-contracting basis up to the time of the bankruptcy; the people who had to wait longer and longer for the cheque from the old company to arrive—I hear the same story. They are owed money and they see an increasingly dim prospect of getting more than a small proportion back. These companies are the life blood of my town and similar communities which depended upon Rolls-Royce. To leave them in this way, virtually defrauded as they have been, seems nothing short of scandalous.
Admittedly a small amount has been paid to those sub-constractors where agreed invoices are not at issue. Suppliers who are still needed for current orders by Rolls-Royce (1971) have also been paid. But for all the other subcontractors, for all those who may have civil actions pending for breach of contract and may in that sense be in a position almost analogous to sundry creditors, for worker shareholders and shareholders alike, the gap between what is apparently on offer from Rolls-Royce (1971) and the receiver/liquidator's valuation for the assets taken over by the company—the aero engine division—is so impossibly wide that they see no hope, even now, of an agreed solution.
After the House returned from the Christmas Recess I put to the Under-Secretary a suggestion which had been widely current in the Press, namely, that the receiver/liquidator's figure for these assets was between £165 millions and £170 millions and the figure quoted by Rolls-Royce 1971—that is, the figure now on offer to the receiver—was about £35 million. I think I am right in saying that if that were the final offer there would


not be a penny for a single shareholder and there would be a pretty poor payment to the creditors.
But there is a problem here. When we put the point to the Under-Secretary we are constantly told—here I paraphrase what he told me in an Oral Answer about three weeks ago—that even if the figures are correct it is particularly inappropriate for the Government to intervene, that they cannot intervene in the dispute between the receiver and the company, and that it will have to be a matter for the impartial assessor. The difficulty is that the Government, wearing a different hat, are Rolls-Royce (1971). It is a wholly-owned public company. Some people do not like to hear it said, but it is a nationalised company. Quite recently the Government were able to effect substantial changes in the executive pattern of the company. They would not have been able to do that if Rolls-Royce had been a private company. It is not good enough for the Government to say that there is nothing they can do in the dispute, because they are Rolls-Royce (1971).
The House, which has debated far too little the tangled affairs of Rolls-Royce Ltd., both at the time of the collapse and since, has a right to hear when the Government expect the independent assessor to report. Secondly, it has a right to know the present offer by Rolls-Royce (1971). We pluck figures out of the air, or, rather, from the daily Press, and the Government say, "They may be right, but we cannot intervene. We cannot do anything." Thirdly, we want to know what can be done for those who were virtually defrauded by the undertakings of November 1971, particularly the worker shareholders in the company. I apologise if that moves the debate one centimeter further than my hon. Friend's original subject.
It is said that a week is a long time in politics, but two years for a community which depended on the Rolls-Royce company, and still depends on it, is a very long time. It is at least two years too long. I want the Under-Secretary to tell the House tonight when he expects the negotiations to be wound up, and at least what is the present position of Rolls-Royce (1971), and not to take refuge—as he has so often—in saying that the matter is nothing to do with him and that Rolls-Royce (1971) has only the most

tangential connection with the Government. That is simply not the case.

8.3 p.m.

Mr. Tam Dalyell: I had better explain my locus and credentials for taking part in the debate. They arise from three separate matters. First, in West Lothian we have the largest organisation of its kind in the Western world, the giant forge of the Cameron Iron Works at Livingston, which makes a large number and variety of parts for Rolls-Royce. My second locus is that I have at length on different occasions raised the problem of creditors and small firms, a large number of which came to their Members of Parliament to express their embarrassment over what had happened. My third locus is that on the Adjournment—oddly enough, on another occasion when the business of the House collapsed—on Tuesday 29th February 1972, I initiated a debate which Was headed in HANSARD:
Rolls-Royce Ltd. (RB21 1 Aero-Engine)". —[OFFICIAL REPORT, 29th February 1972; Vol. 832, c. 319.]
Today's debate, because it has started earlier than any of us expected, has given the opportunity to do some progress-chasing in an interrogative form. I do not know whether the Under-Secretary is briefed on the first issue I want to raise. If this had been my Adjournment debate I should have given him warning. I shall understand if he is not briefed. That issue concerns the rôle of the Bank of England. In the debate on 29th February 1972 I quoted the White Paper on Rolls-Royce and the RB211, which said:
The accepting houses were not informed by the Bank of England that the sum of £42 million to be provided by the Government would he subject to check by the independent accountants, because this check was essentially a matter of determining the exact sum to be paid by the Government to Rolls-Royce, and the Bank of England took the view that it was not a matter of such significance as to require them to draw it specifically to the attention of the accepting houses.
I then said:
The question that arises is as to the whole rôle of the Bank of England in these difficult events.
I should like to ask how the Government saw the rôle of the Bank and how they see this retie being any different for the Bank the next time. This might require some consultation with the Treasury, and perhaps inquiries can


be made …".—[OFFICIAL REPORT, 29th February 1972; Vol. 832, c. 325–326.]
When he wound up the debate, the then Minister for Aerospace, the right hon. and learned Member for Gloucestershire, South (Sir F. Corfield) did not go into that rather important question. I do not blame him too much, because it was put at short notice. I would just put it gently to the Under-Secretary that while we all hope that there will not be a next time, certainly not in relation to Rolls-Royce, we must be wise, because we have been warned. What have the Government learnt about the role of the central bank and the joint stock banks in a matter of this nature? That is my first question. It is one that I believe to be worth asking, and I am glad to have the opportunity to ask it.
The second issue concerns the speech of the then Minister on 29th February 1972. He said:
The procurement executive of the Ministry of Defence has been in very close touch on the technical side with the relevant executives in Rolls-Royce to try mutually to work out a much better system of technical reporting and technical cross-communication between the Government and the company. Equally, on the D.T.I. side, where we are more responsible for the management side, we have been doing the same exercise with regard to financial reporting. We have come a long way in agreeing with Rolls-Royce on the type of financial information we shall require, the frequency with which it is provided and, to a degree, the means by which it is compiled, because obviously accuracy and topicality are affected by that."—[OFFICIAL REPORT, 29th February 1972; Vol. 832, c. 345–346.]
I agree with the former Minister, as we all would, but it is worth asking, 12 months. later, "What has been learnt?" What would be different next time, even though a company other than Rolls-Royce was affected? I do not think that the matter was covered in the debate that my hon. Friend the Member for Derby, North (Mr. Whitehead) initiated.
On patents, the then Minister said:
Here again there is no confusion in the law. The situation in regard to patents arises because of some rather curious provisions in the patent law of overseas countries over which we have no control. For this reason the Government acquired the patents. At the time it was thought that Her Majesty's Government should acquire the patents, the arrangement with the receiver was that, although there was no attempt to put an individual valuation on this large number of patents, it was recognised that in toto they

would not come to anything like the £20 million. That £20 million covered the patents and the remainder of the advance purchase. I think the hon. Member for West Lothian is trying to make a mountain out of a molehill."—[OFFICIAL REPORT, 29th February 1972; Vol. 832, c. 351.]
I believe that on subsequent reflection few people would now say that asking questions about the issue of patents and patent law was either esoteric or making a mountain out of a molehill; because the truth is that the whole question of patent law becomes more urgent every day. Therefore, I should have thought it legitimate, granted the topic of my right hon. Friend's debate, to ask what has changed since that night when the Opposition successfully summoned the then Solicitor-General to come to explain to the House the intricacies of patent law. It seems to me that this is an important issue and it would be an opportunity for the Under-Secretary to report on the matter.
The final issue I wish to raise, apart from the needs of my constituents and some other small firms who, in effect, acted as Rolls-Royce's bankers, is that of the Government's view of their philosophy in interference in the management of Rolls-Royce. I do not ask the question in a carping spirit although at Question Time the hon. Gentleman and his hon. Friend the present Minister for Aerospace and Shipping have had some sharp exchanges with me with some mutual ill-temper of a kind in which I do not normally indulge. However, I believe that the question how the Government see their relationship with a company in the state in which Rolls-Royce (1971) Ltd. now finds itself is serious.
The issue to which I refer was the leaving from Rolls-Royce of Mr. Ian Morrow and the way he was replaced—and supposedly the Government had a hand in it—by Norman Wilkinson and his colleagues who now run the firm. I do not want to stir up a whole lot of difficulties about the past. The question I am asking is not about the past. It is about the future and concerns the relationship and the philosophy of the relationship that any Government—or shall we limit it to this Government?—would have with a firm in the position of RollsRoyce—because the truth is that the whole difficult matter of the replacement of the senior management of Rolls-Royce


left a bad taste, whether we like it or not, in quite a number of mouths. That is a fact which is indisputable.
The question which is worth asking is this: in future, what would be different and how does the Ministry of Aerospace and that sector of the Department of Trade and Industry see their rôle in the choice of senior management? After all, it is on the decisions of senior management, a problem properly raised by my right hon. Friend the Member for Wednesbury, that a company depends. Gently, therefore, and in no carping spirit I ask this serious and interesting question: how does the Under-Secretary see the role of himself and his colleague, the Minister for Aerospace and Shipping in —I will not say meddling but certainly interfering with the senior management of a very famous company? I speak as one who was and am still a friend of Sir Denning Pearson, a person who thought Rolls-Royce was very hardly treated in the late 1960s and early 1970s, by many people who were for ever singing the song of technical innovation.
There are far too many politicians and newspaper columnists and others who berate this country for not taking advantage of some technological development, be it the jet engine or any other of the myriad discoveries made in Britain, and who then turn round when we do make considerable progress—in this case with the RB-211 engine, with all its intricate features—and say, "We should not have taken this risk. It was not properly thought out." This is a case of having one's cake and eating it. It is not a very attractive attitude in either politicians or journalists. To this extent I thought that Rolls-Royce were very roughly treated. I understand that the purpose of this debate is to look to the future and therefore I ask what would be the difference in the light of what was said on 29th February 1972 and in the light of subsequent debate?

8.15 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Cranley Onslow): This debate has covered slightly more ground than some of us might have expected and has taken place at a more congenial time. Neverthless, even though there is an hour or more at my disposal I hope the House will forgive me if I do not attempt

exhaustively to answer every point that has been raised, though I recognise that there is an obligation on those who stand at this Box to provide answers in due course if they cannot do so instantly.
I respond first to the question of the hon. Member for West Lothian (Mr. Dalyell), and in the same spirit. He was kind in his references to our past disagreements. I have no intention of provoking him or allowing myself to be provoked this evening, and I hope we can maintain this new-found amity on future occasions. I believe he will find a substantial answer to some of the questions he posed in the Government's observations on the Sixth Report of the Expenditure Committee under the heading "Public Money in the Private Sector" and in particular on page 3 and onwards in that document, if he studies it, where the Government reply to the four lessons which the Committee saw as being there to be learned from this series of episodes of the involvement of public funds in the private domain. If having read those he still remains in uncertainty or doubt I hope he will let me know. I will then do my best to give him an answer which will clarify the situation.
I understand that even lawyers find it difficult to be absolutely sure on the law of patent, and I hope the hon. Gentleman will not think me cowardly if I refuse to venture into this treacherous area. I again undertake that he shall have an answer on that. Finally, on the question of the role of the Department in the appointment of management of the company I suppose it would be trite if I were to tell the hon. Gentleman that our efforts are directed to making sure that the best men are in the job at any given time; and I suppose it would also be trite if I were to suggest to him that from time to time circumstances and needs change. Although those are fairly rough and ready rules I hope he will take it that those are the ones by which Ministers seek to be guided.
At the same time I have to tell the hon. Gentleman—and this may be an echo of past disagreements between us—that it would be extraordinarily difficult for any Government to put themselves in the position of committing themselves to make public the advice they received on any given appointment, and particularly to


undertake to reveal the reasons why any person who may or may not have been considered for a particular appointment was or was not appointed. I hope he will understand that there is here an area which has to remain within a screen of confidentiality against which Ministers come to this Box and answer as best they can.
I share the hon. Member's desire that we should not go back to acrimony on this occasion. I believe that Rolls-Royce has effective management and good prospects, and I do not wish anything to be said across the Floor of the House which is likely in any way to prejudice those prospects or to make anyone who deals with the firm or works for it feel otherwise than that he is engaged in a first-class enterprise which is a credit to this country. That is a fact. I am certain that we can all agree on that.
I have to tell the hon. Member for Derby, North (Mr. Whitehead) that one of my first duties in this post, exactly a week after I was invited to fill it, was to answer an Adjournment debate initiated by his colleague the hon. Member for Derby, South (Mr. Walter Johnson) on the subject of workers' shares. It would be wrong of me to hold out hope to him now that I can say anything very different from what I said then. I recognise and have great sympathy with the plight of those whose savings were lost.
I know that when this branch of the law is looked at, the opportunity must be taken to make sure that the flaw in the Rolls-Royce workers' share scheme which enabled the "locking-in" situation to develop is never repeated in any future employees' shareholding scheme because it is not adequately appreciated that circumstances can arise such as those which arose in Rolls-Royce. It is, alas, a fact that we have to accept, for shareholders as well as creditors, that a course of events has unfolded which leaves us with no alternative but to act as we have done. I am grateful for the way in which the hon. Member framed his remarks.
The hon. Member also raised the question of the contract with Lockheed, saying that it could have been negotiated more quickly. He will know how long it took to re-negotiate that contract, even with one of the major areas of uncer-

tainty—the financial instability of RollsRoyce—established, so that it did not have an unsettling influence on the renegotiation. If he thinks it would have been easy to carry out those intricate discussions and negotiations with the status of Rolls-Royce undetermined I find it difficult to agree.
Although the hon. Member claims this now—and I do not dispute his title to do so—with more conviction than he expressed at the time, with hindsight, as he admits, as events have passed what strikes me most forcibly is how little we knew for certain at the time, and how little was available in the form of firm information on which to take decisions. We had no idea of the situation which was developing and which would have such enormous implications. Having taken some interest in this at the time, from a position of no responsibility but one of close interest, I know that there was the eternal frustration of not knowing for certain what could be relied upon. It was this which made the problem so difficult—the most difficult which has ever fallen to be handled by the leaders of business and industry.

Mr. Dalyell: The question we have to ask is: what will be different about the next time? Will it be any easier the next time there is such a calamity? Something ought to be done about this. If the roof is leaking before the storm we should not wait until the storm to do something about it and then wring our hands in agony and say, "We ought to have done this while the weather was relatively calm".

Mr. Onslow: I hope that the forebodings of the hon. Gentleman can be established as unnecessary. I hope that we will not be starting from the same place again. We must look at the lessons to be learned from this case. The first lesson is that before a Government provide selective assistance on a large scale they must satisfy themselves that the company has the financial, technical and managerial resources to complete the contract. If that step had been taken—if the contract had been examined more closely, if the management of the company had been of a different calibre, if other things had not been as they were—it is possible that we would not have got into the situation that came to pass with the bankruptcy of Rolls-Royce.

Mr. Dalyell: If that were the scenario, some of us—and I would be one of them —would be wringing our hands at the lack of initiative and foresight we showed through not getting into the American market at the time. This has to be looked at not just from the point of view of Rolls-Royce. It is easy for us—and I am as bad as anyone here—to say, "This is what we ought to have done." But when Sir Denning Pearson and his colleagues won that contract in New York there was no Member of this House who was not in favour of it.

Mr. Onslow: I always hesitate to quote myself, unlike Mr. John Smith, who until recently represented the Cities of London and Westminster in this House. I doubt whether quotations from one's speeches add spice to our conversations. I certainly would not make that claim in my case. However, having had occasion to read the report of the parliamentary exchanges when the right hon. Member for Bristol, South-East (Mr. Benn) made his first announcement about the contract, I have been somewhat comforted to find that among the questions he was asked was one from myself. I said:
While the whole House will welcome the order for the RB.211, may I ask the right hon. Gentleman whether he is satisfied that sufficient financial and physical resources will be available to Rolls-Royce to enable the RB.207 to be developed in time for the airbus to meet the specifications which he has set?"—[OFFICIAL REPORT, 1st April 1968; Vol. 762, c. 47.]

Mr. Dalyell: A verys good question.

Mr. Onslow: I will not quote the answer. The hon. Member can look it up for himself. It was not borne out by events.
I come to the remarks of the right hon. Member for Wednesbury (Mr. Stone-house). If he will forgive me for saying so, he made rather an odd speech. It is nearly two years and two days since his speech in the debate on 11th February 1971 on the Rolls-Royce Bill. He repeated tonight some of the things he said on that occasion, although perhaps he said them then with still more passion and vigour.
He brought little new evidence to his cause this evening. He made an allegation about the Government having applied extreme pressure to force bank-

ruptcy on the old Rolls-Royce company. I did not hear much evidence adduced for this. If he has some no doubt he will not hesitate to give it to us. In the whole of his speech I did not hear a single reference to the White Paper published just over a year ago, which he must have read. If the hon. Member did read it I fear that he may have forgotten some of it, because he will find set out there a clear and succinct account of some of the matters which seem to worry him. I direct his attention in particular to paragraphs 18 onwards of that White Paper, and suggest that he looks at what is written there. I remind him, as the hon. Member for Derby, North said, that this White Paper has not been debated by the House. As far as I know there has been no particular pressure from the Opposition for it to be debated. This suggests that it is taken to be not a tendentious or misleading account but basically an accurate and complete one.

Mr. Whitehead: My hon. Friend the Member for West Lothian (Mr. Dalyell) requested an Adjournment debate on the White Paper a year ago. He received, I believe, a non-committal reply from the then Minister, and no debate has ever taken place.

Mr. Onslow: I do not know how hard the hon. Member has pressed it since that time. I confess that I had no opportunity to read the speech of the hon. Member in that debate, not having had cause to do so at the time, and he, to my knowledge, not having pressed any of the matters he raised then in correspondence with me since I undertook responsibility for these matters.
I hope I may say, therefore, without offence that there has not been any very great pressure or evident surge of interest in this subject. It come up occasionally in debates of this kind, but I believe I am right in saying that the White Paper has been accepted by the whole House without debate, and we are entitled to draw conclusions from that fact.

Mr. Dalyell: I decided to let parliamentary sleeping dogs lie. It is true that I have not pressed the matter. I thought it was an opportunity to raise three seemingly sensible and appropriate subjects. This, by chance, was the opportunity to do so. I should not have pressed for an Adjournment debate.

Mr. Onslow: I am grateful to the hon. Member for his explanation. I drew him into the argument because his hon. Friend the Member for Derby, North seemed to be relying on him, mistakenly so, in my view.

Mr. Stonehouse: The Minister is perilously near to treating the House of Commons to a brush-off. When he asks why these points have not been raised, he must bear in mind that everybody in the House of Commons expects the Government to do their job.
There have been discussions between the Government and industry and representations have been made on behalf of all these firms. It is not in the interests of a satisfactory outcome for Members of Parliament on this side of the House apparently to be trying constantly to raise party political points. That is not our intention.
It ill becomes the Minister, in replying to the debate, to try to make out that we have not been interested simply because these points have not been raised. We have been intensely interested, but during the past two years we have been expecting the Government to do something. The fact that the Government have not is the reason for the Adjournment debate tonight.

Mr. Onslow: I wonder what the attitude of the right hon. Gentleman would have been had our roles been reversed. I wonder whether he would have taken sustained silence as evidence of continuing interest or as evidence of disinterest. I have a feeling that his inclination might have been to come to the latter judgment. I am certain that the right hon. Gentleman would have been busy enough dealing with other matters pressed on him by those lion. Members who take the trouble to press them. I do not think that the right hon. Member is fair in suggesting either that I seek to brush the motion off or that there is anything in the way in which he himself has pursued his points over the last two years and two days which would lead me to concede him the point that he has shown a continuous and burning interest. Nevertheless, he has raised it tonight and I wish to reply to him tonight.
The right hon. Gentleman spoke, both in the motion and in his speech, of an

expectation on the part of the Rolls-Royce suppliers of continued Government support for aero-engine projects. He implied that this involved the Government in a responsibility to provide compensation to the suppliers. In fact, he went rather further than that—as, indeed, he has done on other occasions. If that was his suggestion, I cannot accept that anything has occurred since the last General Election which fits his description of "nods and winks" on the part of the Government. I cannot answer for the old company; I cannot answer for what happened before the last election; but if the right hon. Gentleman is telling us now that some undertakings, explicit or implicit, were given, he may agree that they might well have been declared to the House.
I must also tell the right hon. Gentleman that his assertions in that area do not necessarily correspond with other statements that have been made on the same subject. He may understand that when he first made these assertions, two years and two days ago, they attracted some attention. I can tell him that I, as a member of the Public Accounts Committee—as did other hon. Members as members of the Trade and Industry Sub-Committee of the Expenditure Committee—went to some pains to press the point when witnesses gave evidence to the committee. I can tell the right hon. Gentleman, and if necessary I can give him the column references for the evidence, that we had a categorical assurance that there was no such implicit or explicit total commitment to the project as I understand him to suggest. On that point at least he and I must disagree.
It is true that the Government have a close relationship with firms in the aircraft industry. They are the main customer on the military side and also provide launching aid for civil projects. None of this alters the basic position of the aircraft companies as commercial concerns whose boards are responsible for the way a company is run, the busines it undertakes and the success it achieves. This is true of launching aid. The principle is that the Government's contribution is fixed in advance and calculated as a given percentage of estimated costs. Once the sum is calculated, it is fixed and there is no reason why anyone should believe that,


because the Government are giving a fixed sum they will, if occasion arises, provide any money over and above that.
In this connection the right hon. Member for Bristol, South-East (Mr. Benn) answered fairly specifically a Question on 22nd October 1969. Mr. Roebuck asked him
…whether he will make a statement about the assistance his Department gave to Rolls-Royce Limited in securing a contract for the RB211 engine from the United States of America.
The right hon. Gentleman replied,
As a supplement to the statement I made in the House on 1st April, 1968, I can add that the launching aid granted for this very promising project is subject to a maximum of just over £47 million"—[OFFICIAL REPORT, 22nd October 1969; Vol. 788, c. 279.]
I do not believe that that answer can be described in the terms and conditions in which the right hon. Member for Wednesbury now describes it. We are dealing with commercial concerns and with contracts made by the Government with such concerns. It would be wrong and foolish for anyone to suppose that such contracts secure for a company a cloak of immortality making it immune from the realities of the commercial world.
Whatever the Labour Government thought of the achievement by Rolls-Royce in landing the RB211 contract, their commitment was to provide up to £47 million launching aid. The fact that they regarded this sum as the maximum was demonstrated by their action when the costs rose. They did not increase their commitment. The present Government did not enter any open-ended commitment to the company to see the project through at whatever cost.

Mr. Stonehouse: The weakness of the hon. Gentleman's case at this stage is that the Government are providing on-going support for the RB211.

Mr. Onslow: I shall come to that. When I do, the right hon. Gentleman will not find it a weakness. I was reminding the House that we did not enter into an open-ended commitment. We offered up to £42 million extra launching aid for the engine, with the company obtaining extra loans from its own bankers. The company's own commitments were linked with

the recovery of the money and depended also on the levy on sales. The White Paper sets out the story in full. The Government decided that they could not commit any further public funds to support the company, either generally or specifically for the engine, particularly in the light of the absence of any reliable estimates of the liabilities they would then be carrying.
So, as the White Paper relates, the company appointed a receiver and he disclaimed the RB211 contract as an onerous one. Since the company was no longer to undertake the project, there was no question of Government liability to provide launching aid for it. During the critical time up to the time that the renegotiation of the project was completed, work on the engine continued only because of indemnity from the Government. When the right hon. Gentleman complains of the way in which contractors have been treated by the Government, it is less than fair of him to forget that had it not been for the Government's action in taking on the contract, making it possible for it to continue and establishing the new company to manage the enterprise of this engine and other projects so essential to our defence interests, very large numbers of jobs would have been lost together with a very large amount of money.
It may help hon. Members if I try to answer one or two of the questions that were put about the present position of the creditors.

Mr. Dalyell: One point is that a number of creditors held the view that Rolls-Royce was backed by the Government, and it is a nub point for the future that never again must there be a degree of ambiguity. There was a vague idea of what obligations the Government had. and what obligations they did not have. Therefore, the Government of either party have to learn that the dangers of ambiguity in a situation like that can be terrific.

Mr. Onslow: I hope that when the hon. Gentleman reads the Government's observations to which I have drawn attention he will see that we have learned that lesson. I am not so sure, from what the right hon. Gentleman said, that he agrees that there was no ambiguity, but he and


I would both agree that ambiguity in circumstances of this kind is wholly undesirable and unfair, and we see the consequences of this situation as something that should be avoided in future. This is similar, though on a smaller scale, to the consequences of the Beagle situation. I am certain that the relationship must be made so clear that the prudent industrialist cannot unwittingly blunder into a situation in which he finds that he has put himself at risk.
It would be too much to try to protect the foolish industrialist from the consequences of his own follies, but I go as far as to say that a prudent business man should not be put in an intolerably ambiguous situation, though I qualify that by saying that I know of my own knowledge of people active in this area who did not take on business that was offered to them by the Rolls-Royce company for reasons which seemed good to them then and on which, perhaps, they had cause to congratulate themselves afterwards.

Mr. Stonehouse: Is the hon. Gentleman making clear in this debate that the Government take no responsibility whatsoever for the debts of Rolls-Royce (1971) Ltd., although it is a wholly-owned company? Is that the message that is going out tonight to the suppliers?

Mr. Onslow: I am astonished that the right hon. Gentleman should seek to convey that message. I should have thought that it was clear that the Government take responsibility for Rolls-Royce (1971) Ltd. in the event—which and I could scarcely conceive of—of a liquidation arising again.

Mr. Stonehouse: We are talking about ambiguity. We have therefore to be careful that there is no ambiguity tonight. Are the Government responsible for the debts of Rolls-Royce (1971) Ltd., or are they not? There can be no ambiguity about that. There must be a clear answer.

Mr. Onslow: The answer is not "Yes" or "No". The answer is that the responsibility for the conduct of the company and the management of its affairs rests with the men who run it. The Government are not the board of manage-

ment. The right hon. Gentleman knows that. Should it come to the necessity of the company ceasing to trade in a liquidation situation, as it is a wholly-owned Government company the situation would be—and I should have thought that the right hon. Gentleman would agree with this—the same as that which occurred when the Beagle company went into liquidation. I am not seeking to draw any distinction between the two circumstances, except to say that Rolls-Royce is so managed and so much better set upon a business activity that there is no likelihood that it will go into liquidation.
The Government are very much aware of the continuing hardship, and in some cases suffering, caused by the collapse of Rolls-Royce. The debate this evening has focused to some extent on the subcontractors and suppliers of the company. There is nothing new that I can usefully add about the shareholders, particularly the worker-shareholders, though I assure the House that it would give me great pleasure if I were able to find some way out of the situation to benefit them.
To put the matter in perspective, perhaps I can give some figures about the number of creditors. The latest count puts the trade creditors, excluding financial institutions, as claimants for some £75 million. We believe that this is made up of 7,500 claims, though it does not necessarily follow that the receiver would accept that all those claims are established as amounts agreed to be due. I am afraid I cannot say how many of the 7,500 claims from these trade creditors come from sub-contractors and how many from people such as caterers, window cleaners, travel agents and so on. Our estimate is that Rolls-Royce had about 1,000 sub-contractors when the company collapsed.

Mr. Whitehead: Since the hon. Gentleman has now told the House the amount of the claims outstanding at the moment against the old Rolls-Royce company, could he answer a question which I asked him earlier and which he has overlooked, namely, what is the present offer by Rolls-Royce (1971) Ltd. to the liquidator for the assets?

Mr. Onslow: I shall come to that point. The situation in which the subcontractors and others find themselves


was the subject of passionate comment in the debate which took place over two years ago when I myself, since there were firms in my constituency which were affected, commented sharply on the situation. It is worth noting that although there were dire predictions at the time, it does not seem as though the consequences for any significant number of sub-contractors were so serious as to force them into liquidation. I do not try to belittle their loss, but I am attempting to put the matter into perspective.
So far as I am aware, only a small number of the sub-contracting firms to Rolls-Royce have gone into liquidation since the old Rolls-Royce company itself went into liquidation. I have heard it said that the number is no more than might be expected in any other sphere of business activity. Some encouragement is to be derived from that, although I do not seek to exaggerate the situation.
When the Government faced this situation and when all the factors had been assessed, the decision was taken that it would not be a responsible use of public funds to assume a very large unquantified commitment either by supporting the company with funds or by taking it over. Instead, the Government acted promptly to set up Rolls-Royce (1971) Limited to buy the aero-engine assets, and with the new company re-negotiated the RB211 contract. Both those policies provided an on-going source of business for the suppliers and sub-contractors of Rolls-Royce and also provided security for the tens of thousands of jobs involved, in Rolls-Royce and elsewhere.
At the same time the success of the new company in establishing itself was in large measure due to the co-operation and effort of those who had suffered in the collapse. It is right that tribute should be paid to them, and I gladly do so. But it would be fair for the House to recognise that the Government played some part in making it possible for the project to survive.
The right hon. Gentleman mentioned specifically that there has been some comment—although without some research I cannot tell him precisely what representations I have received on the subject —about the components and materials, sometimes of substantial value, which were supplied to the old company, passed on to Rolls-Royce (1971) Limited and

incorporated into the engines sold by it or used to manufacture components of engines sold by it.
It has been suggested that the new company should pay the suppliers direct for those components. I think that that is what the right hon. Gentleman suggested. I hope that I can persuade him that that course would not be the right one. The components were supplied by the sub-contractors to the old company. Unless I am much mistaken, the nature of the relationship between the two would be such that title would pass upon delivery. They became the property of the old company although the old company had not paid for them.
When the receiver took over the enterprise he sold the components and materials to Rolls-Royce (1971) Limited as part of the aero-engine assets of the old company. The new company is to pay the receiver a fair price for these assets. As the suppliers have sold the goods to the old company, like all other unsecured creditors they must look to the joint liquidators for satisfaction of their claim. The new company is paying for the goods in question but it is paying, as is necessary in liquidation situations, the receiver and his fellow liquidators. It cannot pay unsecured creditors of the old company direct. That is the position de facto. I suggest to the right hon. Gentleman that there is some comfort to be drawn from the fact that the sub-contractors have gone on doing business in the same area, making the same machinery and the same components and supplying them to the receiver in the first case and then to the new company.
It is not for me to say what terms and conditions they may have renegotiated. However, it is not wholly out of the question that in the process of renegotiation they have been able to obtain some compensation which will, if not immediately, recoup their loss and at least reimburse them for the onus of the additional interest which they have had to pay on loans required to meet the debt situation into which the old company placed them.
There is no sense in not being matter of fact about this. It is what happens when companies go into liquidation. The only unique feature of the bankruptcy of the Rolls-Royce company was its size. Were it not for that, and, perhaps, its


name, there would be less comment on what has occurred. It is possible for any company, whatever its size, to go into bankruptcy in the same way as the old Rolls-Royce company.

Mr. Dalyell: One question which will be asked by the American owners of one of the large suppliers is, "This is what the Under-Secretary says, but what are the British going to do about altering their bankruptcy laws?" I do not expect an answer on the alteration of the bankruptcy laws from the hon. Gentleman tonight, but I should like some assurance that the Government are looking at what lessons can be learnt from Rolls-Royce. Next time we shall not be forgiven, least of all by the multinational companies whose employment we welcome in this country.

Mr. Onslow: I keep trying to persuade the hon. Gentleman that we have learnt lessons. Perhaps, because I am going on at such length, he is forgetting that. I have no wish to detain the House unnecessarily. I take his point. I have not found that the consequences have been so damaging and there is respect in many parts of the world for the way in which we have reacted and the way in which the phoenix has risen from the ashes.
I turn to the delay in paying the creditors. It is a matter of regret that the price for the aero-engine assets has not yet been settled. I believe that all the parties share that regret. It is not in anyone's interest to have this major uncertainty remaining. However, large questions of judgment must be involved in a situation of that size and complexity. It would be wrong for me to attempt to influence the joint liquidators to accept a lower figure than they think is justified.
The Government did not wish to put pressure on Rolls-Royce (1971) Limited to go beyond what it believes to be a proper price. In the circumstances the only solution was to use the procedure freely agreed by both parties in advance for reference to an independent expert whose decision is binding. It is important to stress that. The nature of the decision is binding and there is no appeal from it. In doing this, the parties followed the provisions of the Heads of Agreement signed by the receiver and the

old company in 1971. It is the receiver and his fellow joint liquidators to whom the creditors should look.
I cannot avoid saying that the consequences of the commercial failure of the old company are the responsibility of the board of that company—

Mr. Stonehouse: Is the hon. Gentleman aware that there is great resentment in the industry, which feels that the Government are shaking off their responsibility behind this so-called expert against whose decisions there will be no appeal? There is the impression in the industry that the Government are not facing up to their real responsibilities. Will the Minister reconsider this decision to pass all the responsibility to this so-called expert?

Mr. Onslow: No. I cannot reconsider that decision any more than I can tell the right hon. Gentleman what the figures are. It would be wrong of me to do so. Neither the right hon. Gentleman nor the hon. Member for Derby, North put his finger on what is the essential ingredient. The Government have an additional responsibility to pay, with the taxpayers' money, whatever may be the price for the assets agreed as fair by the independent assessor—

Mr. Whitehead: Surely the hon. Gentleman agrees that if the gap is as wide as the figures which I quoted indicate, there is great cause for concern on the part of the creditors, who see the gap as one which, with the best will in the world, the independent assessor is unlikely to be able to bridge to their satisfaction.

Mr. Onslow: I do not think that they are entitled to reach that conclusion. Equally, they would be entitled to be annoyed if it were suggested, or if it were a fact, that the Government had intervened to pick a figure out of the air and to say, "That is what we think is fair. Forget about the independent assessor. We shall cut through this and give you £X million." Even the creditors would not accept that as a fair figure. What is more the taxpayers would not regard the Government as having defended their interests. I cannot believe that the hon. Member for Derby, North would seriously advocate that course if he had responsibility in these matters.
I have spoken for longer than I intended. Even so I dare say that I have not wholly convinced the right hon. Member for Wednesbury that my arguments are unanswerable. In the situation in which we find ourselves, not as a result of any choice of our own but as a consequence of events which antedate substantially the last General Election, there has been no alternative but to go on as we have.
I end on this note. I am sure that there is no desire on the part of any of those concerned in the settlement that it should be protracted longer than necessary. I hope and believe that we shall see matters move forward. I am sure that the parties themselves are well aware of the need to settle them and will press as hard as they can to a settlement.

Question put and agreed to.

Adjourned accordingly at one minute to Nine o'clock.